For many American plastics firms, Brazil remains a place known more for its enchanting music, soccer superstars and mesmerizing beaches than for its business opportunities. U.S. plastics processors spend a lot more time and money chasing customers in other developing economies, like China and Mexico.
But negotiations to create a free-trade zone for Brazil, the United States and the rest of the Americas could change that.
Brazil is the largest economy in South America, with 175 million people, and one of the world's 10 largest markets for plastic.
The country has been a relatively stable anchor on a continent battered by Argentina's economic emergency and Venezuela's political crisis. Brazil's new president, Luiz Inacio Lula da Silva, is a former labor union organizer who has surprised the business community by largely following the economic policies of his more business-oriented predecessor, Fernando Cardoso.
Lula, as the popular new president is known, came into office with a mandate to pay more attention to the concerns of ordinary people and do more to combat Brazil's chronic poverty. So far, he's decided he can't alienate the business community and that a strong economy, linked to the world, ultimately can deliver more to his constituents.
The trade pact is to be negotiated by 2005, but some observers worry that the deadline will slide because the talks are difficult and because war priorities dominate Washington.
Both countries engage in their own forms of protectionism and both have compromises to make. Brazilians complain loudly that the United States puts up nontariff barriers for Brazil's most competitive products, like steel and orange juice, and note that just receiving lower tariffs without addressing those nontariff barriers would be stupid for Brazil.
Those economic issues must be solved. It also would be wrong if the American government allowed its understandable concern with security issues to keep it from pressing ahead forcefully with free-trade talks.
Trade is a controversial subject now, and many people question whether the pace of globalization should be slowed down.
But with Brazil, it seems like freer trade would be a win for the plastics industry. The industry has a surplus of hundreds of millions of dollars a year with Brazil right now, including a surplus of more than $120 million in plastic products, even though Brazil's economy is protectionist for polymers. (By the way, the assessment that the U.S. economy is more open for plastics comes from Brazil's plastics trade association, Abiplast.)
In 2000, the United States had a $680 million surplus in plastics with Brazil, according to a recent report from the Society of the Plastics Industry Inc. in Washington. That's the third-largest surplus for the U.S. plastics industry, trailing only Mexico and Belgium.
If the U.S. industry has a surplus in the face of Brazil's protectionist economy, it seems like a safe bet that plastics companies would fare even better under a free-trade regimen. Maybe then the U.S. plastics industry will find the samba beat more to its liking.
Washington-based staff reporter Steve Toloken has covered the 2001 and 2003 Brasilplast shows in São Paulo, Brazil.
