State could provide Latins lucrative trade benefits

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SAO PAULO, Brazil -- What does Pennsylvania have to offer Brazil and Chile, nations whose economic rise has drawn numerous U.S. delegations to seek trade and investment at their sprawling urban centers?

Through more than a week of meetings, starting today, Gov. Tom Corbett and business leaders hope to convince their South American counterparts that the answer is lengthy and compelling.

There is -- Mr. Corbett plans to say -- a location within reach of much of the North American population, with relatively low energy costs and an educated workforce: a port, Philadelphia, that already is the top arrival point for fresh fruit from the two nations. He also will point to a source of natural gas and its byproducts in the Marcellus Shale.

And there are specific businesses, represented on the mission, whose leaders believe their products can fill needs. A Mercer County company, Regenex, takes vinyl scrap from windows and makes seawalls that the CEO, Dan Berent, says could be used along the massive coastlines of the two countries.

"International sales is really a point of focus for me right now," Mr. Berent said.

Last year, he said, a mission to Australia and New Zealand yielded about $250,000 worth of business, with more on the way.

Brookville Equipment, a Jefferson County manufacturer, makes freight locomotives that could move Brazilian products, such as sugar cane, from the interior to the coast, as well as towing locomotives that could be part of an infrastructure expansion as the country prepares to host the 2014 World Cup and 2016 Summer Olympics.

Public Utility Commission chairman Robert Powelson, a member of the delegation, said Pennsylvania energy production, such as that of the Marcellus Shale, could lead to exports both of natural gas and byproducts such as ethane.

"The demand for those ethanes is huge, and it's huge in South America," he said. "The demand for natural gas exports to power new power plants is huge right now."

More broadly, the entry of increasing numbers of Brazilians and Chileans into the middle class means huge potential markets for the types of goods Americans buy with their discretionary income.

"They are economies that are growing rapidly, and where the middle class is growing rapidly, and the sorts of things the United States exports are the sorts of things middle-class people buy," said Charles Shapiro, a former U.S. ambassador to Venezuela who served as deputy chief of mission in Chile in the 1990s. "They want flat-screen TVs and better houses. All the sorts of things the United States does, that's what Brazil and Chile are buying."

Brazil, the largest territory and economy in South America, overtook the United Kingdom in 2011 as the world's sixth-largest economy, though a year later the pair reversed rankings, according to the World Economic League Table from the Centre for Economics and Business Research in London.

The country has emerged onto the global scene in the past 25 years as it transitioned to democracy and took hold of rampant inflation, said Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Center for Scholars in Washington, D.C. Tremendous change has taken place as a population that in 1931 -- the year of the birth of former President Fernando Henrique Cardoso, who is credited with leading Brazil's economic rise -- was 80 percent rural had become 80 percent urban by 1980, Mr. Sotero said.

"This country, that in 1931 had one paved road and sold only coffee, today builds and sells airplanes for American companies," he said.

Chile, which since 2004 has shared a free trade agreement with the United States, has experienced steady growth for the past 20 to 25 years, said Jose Raul Perales, director for the Americas at the U.S. Chamber of Commerce.

"The fundamentals of Chile's economy are very solid, perhaps the most solid of any Latin American country," Mr. Perales said.

Chile delivers much of its U.S. fruit exports -- such as fresh grapes -- into the country through the refrigerated storage facilities of the Port of Philadelphia.

Between the size of Brazil's economy and the infrastructure improvements needed before it hosts the world's top sporting events, and Chile's emphasis on copper production and subsequent need for mining equipment, the countries make smart destinations for a Pennsylvania trade mission, according to Josephine Olson, a University of Pittsburgh business professor who directs the business school's International Business Center.

And since business typically is conducted face-to-face in Latin American countries, she said, a chance to get acquainted is more than worth the trip.

"I think it's very good for people to actually make contact in Latin America because Latin Americans want to know you before doing business with you," she said. "It's good to get out there and meet some people."

Pennsylvania government and business leaders are hardly alone in their interest in the two South American nations. The governor of Florida, Rick Scott, is headed to Chile in May, after a trip to Brazil in 2011. Massachusetts Gov. Deval Patrick traveled to both countries that year, as did Iowa Gov. Terry Branstad in 2012.

The agenda for the trip includes briefings for the Pennsylvania party on how to do business in the two countries, as well as sessions for Brazilian and Chilean executives on setting up shop in Pennsylvania. There will be meetings with businesspeople and with Pennsylvania university alumni living in the two countries.

Mr. Corbett, meanwhile, is scheduled to meet with dignitaries in both countries, including President Sebastian Pinera in Chile.

In Santiago, the Pittsburgh region will have a representative in Victor Diaz, a member of the board of the Pittsburgh Metropolitan Area Hispanic Chamber of Commerce. Mr. Diaz said he has a special focus on the mission's location because he hopes to attract more Hispanic people to a county where only 2 percent of the population are of Hispanic or Latino origin, according to the U.S. census.

"I tell people this is the last frontier for Hispanics," he said. "Downtown, you can pick up a building there for $4 million. That building in New York City will be $25 million. You can make a good investment in a region that's undergoing a renaissance of sorts."

"These guys from Latin America, they fly to Miami," he said. "Miami and New York. Why not Pittsburgh?"

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Karen Langley: klangley@post-gazette.com or 1-717-787-2141.


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