South America gleams with potential for trade and investment - By Karen E. Thuermer, AJOTSouth America appears to be exploding with trade opportunities, particularly with Brazil. Enter the US$1.5 billion steel plant constructed in Sepetiba Bay in the Brazilin state of Rio de Janeiro by Brazilian resources giant CVRD [RIO] and German heavyweight ThyssenKrupp. “This is the biggest private investment in the state of Rio de Janeiro since the 1970s,” comments Rosinha Garotinho, Governor of the State of Rio de Janeiro. In fact, the project, which began manufacturing steel last year, represents the largest private investment in the hemisphere in its sector. The goal of the plant, says company representatives, is to form the platform for profitable growth focused on the NAFTA region and Europe. The plant was constructed to produce 5 million metric tons of steel per year. Not only is manufacturing steel critical to meeting worldwide demand, particularly that coming from China; Brazil is fostering its own building boom. In 2014, Brazil will host the World Cup tournament, and in 2016 will be the site for the Summer Olympics. Brazil Faces Huge Investment In fact, recently Brazilian state government officials indicated that some US$50 billion in investments are currently underway that include offshore oil development and the upgrading of two petroleum and petrochemical refineries. Gas pipelines are also being built to flow gas inland, as well as a liquefied natural gas reception terminal within Rio’s Guanabara Bay. In addition, Petrobras announced a US$174 billion investment program for 2009-2013, which is a 55 percent increase on its 2008-2012 plan. According to Lorrie Fussell, Brazil Desk Officer, Office of South America, U.S. Department of Commerce, U.S. partnerships with Brazil have been growing for some years. “There are incredible business opportunities grown from trade relationships that continue to become stronger,” she says. “For a long time export numbers were in the $15-16 billion range,” Fussell says. “Now we are seeing those figures exploding.” Economic indictors show how Brazil has been expanding in recent years. For one, both the United States and Brazil enjoy $63 billion in trade that goes both ways. U.S. exports to Brazil are particularly expanding. In 2006, the United States exported a little over $19 billion. In 2007, that amount increased to $24 billion, and in 2008 it totaled $32 billion. “For first time in a long U.S. exports have exceeded the imports from Brazil,” Fussell says. U.S. exports to Brazil accounted for 2.5 percent of overall U.S. exports in 2008, up from 1.6 percent in 1994. Among the top U.S. exports are machinery ($6.7 billion); aircraft and spacecraft ($5.6 billion); electrical machinery ($3.5 billion); mineral fuel ($2.2 billion); and organic chemicals ($2.1 billion). “These are very similar to exports and imports,” she says. According to a recent report released by the U.S. International Trade Commission in February 2010, Brazil’s trade ties are growing faster with nations encompassing Latin America and the Caribbean (LAC), China and the European Union than with the United States. For example, Brazil’s exports to the United States have had a slower compound annual growth rate (10%) compared to its exports to China (40%), LAC (18%) and the EU (15%). In addition, in the past decade, Brazil has prioritized regional integration with MERCOSUR, increasing bilateral trade between Brazil and South America. Brazil’s bilateral trade with China has also been influenced by growing Chinese investment in Brazil, particularly in soybeans and iron ores. These points are especially highlighted since Brazil’s recent economic development, reflected in expanded exports, oil discoveries, financial stability, growing investment, and booming consumer demand, makes Brazil an attractive trade and investment partner. Welber Barral, the Brazilian trade minister, reports that he expects China to remain in a key posit