SAO PAULO, BRAZIL — Right now, Brazil's major link to the global economy is through Mercosul, the customs union that Brazil dominates and includes Argentina, Uruguay and Paraguay.
That could change dramatically by the next Brasilplast, set for 2003.
Brazil is negotiating with the rest of the Americas, including the United States, about setting up a so-called Free Trade Area of the Americas starting in 2005. Brazil is also in separate talks with the European Union about a free trade pact, scheduled to be completed in 2004 or 2005.
It is too soon to know the details, so many industry officials interviewed at the trade show were unsure. But many Brazilians are ambivalent and express concern that their economy would be overwhelmed.
"The concern is being caught without the level of competitiveness that a highly developed country has, such as the United States," said Merheg Cachum, president of the Brazilian Plastics Industry Association (Abiplast) and the Latin American plastics industry association (Aliplast).
"The big issue is whether governments will create adequate instruments for a gradual implementation of the agreement or not," he said during Brasilplast 2001, held March 5-10 in Sao Paulo. "[We] fear for the imbalance of countries in the region relative to the United States, as well as between countries within the region."
He said that is the consensus of Aliplast members except for Mexico, which is already strongly linked to the United States as part of the North American Free Trade Agreement.
Most likely, he said, the plastics industries in Mercosul will present a common position in the FTAA talks.
Echoing a theme common among Brazil's businesses, he also said South America should adopt the same nontariff market protection mechanisms the United States uses for industries such as steel and orange juice.
Cachum said Brazil needs a much better tax structure to be competitive, but he also said that unless the United States drops some of its protectionist policies, such as anti-dumping laws, negotiating an FTAA will be very difficult.
Because Latin America has much higher poverty, unemployment and inflation problems that need to be addressed, "the globalization process can be a one-way street," said Giordano Romi Jr., vice president of injection press maker Industrias Romi SA in Sao Paulo.
Others, like Alejandro Wiederhold, managing director of robot maker Wittmann do Brasil Ltda., said Brazil will "benefit very much with a free trade agreement."
Luiz Afonso Cortes, regional sales manager in Sao Paulo for Canadian mold maker StackTeck Systems Inc., said Brazil will benefit from better access to the United States.
But Cortes predicted that some Brazilian mold shops will not survive the transition.
Brazilian government officials in Washington said they are constructively pursuing FTAA talks but that Brazil has a much more complex economy than other South American nations.
But anxiety about trade deals is clearly not limited to Brazil.
If the United States is not able to reach an agreement with Brazil, it could discover that Brazil strikes a deal with Europe that hurts U.S. prospects, according to a January report from the U.S. Council on Foreign Relations.
"If France gives in on agricultural issues, a major EU-Brazil deal could be cut that would leave the United States out," the report said.
EU exports to Brazil currently are outstripping the United States', the report stated: "Without a proactive agenda from Washington, this process could pose a potential threat to U.S. economic prospects in the Brazilian market."
Brazil is key because it has more than half of South America's population and gross domestic product, the report said.
U.S. investment in Brazil is five times that going into China, and Brazil's economy is almost as large as China's, the council said.