After two years of declining exports, Mississippi is gaining ground again.
“Between 2002 and 2003, exports to Mexico dropped 40%, exports to Europe dropped about 30% and exports to China fell about 20%,” said Liz Cleveland, manager of the Mississippi Development Authority (MDA) International Trade Office. “Across the board, most states had similar experiences. Much of it was because of SARS, security-related shipping problems, the economic downturn and the devaluation of the U.S. dollar. For a while, it was one thing after another.”
Between 1993 and 2000, Mississippi set a record when export sales increased 121%, from $803 million to $1.78 billion, representing the eighth-greatest increase in the nation. By 2000, 50% of Mississippi exports were going to Mexico and Canada, the state’s two biggest growth markets since NAFTA (North American Free Trade Agreement) was signed. Leading export categories included chemicals, computers and electronic products, machinery, apparel, electrical equipment, appliances and parts, while the top five agricultural exports were poultry, cotton, soybeans, rice and live animals and meat.
“2004 already looks better,” said Cleveland. “Exports to Mexico are up 130% year-to-date and exports to Canada are up 21% year-to-date. However, because contracts are based on shipping every three, six or nine months, the year-end numbers will be the most reliable to spot trends.”
Through May, Mississippi exports were valued at $1.2 billion, with chemical manufactures accounting for nearly one-fourth of all exports, followed by paper products (12%), machinery (12%), crop production (7%) and all others completing 45%. The top five trading partners were Canada, Mexico, Belgium (up 12%), China (up 124%) and Brazil (up 109%), replacing Honduras (down 51%).
Last year, two important foreign trade agreements (FTA) were signed. In May, the U.S. inked a deal with Singapore, and in June, with Chile.
“Having Chile added to our free trading list will help us tremendously because Canada already had that agreement and it made our products automatically 15% to 20% higher,” said Cleveland. “That agreement brought us back to a competitive level.”
Farmers and manufacturers should benefit the most from the Chile FTA, said Sheryl Pinckney-Maas, commercial officer for the local U.S. Department of Commerce Office, “while the Integrated Sourcing Initiative of the Singapore FTA should aid exporters in Mississippi’s IT sector.”
MDA has a full-time export office in Santiago, Chile, but because of budget cutbacks, the office in Singapore was closed. Instead, Mississippi entered into a shared agreement with other states for representatives in China.
“Because we’ve had so many inquiries about China, we’ve had to refocus some of our efforts in Southeast Asia onto China,” said Cleveland. “China is a very complex market that we couldn’t work from Singapore.”
Even though China was Mississippi’s fourth-largest export partner in 2003, export activity has fluctuated this year because of U.S. concerns about China’s trade practices.
“Also, the jobs we lost to Mexico are now moving to China, so it’s come to the forefront as a big trade issue, and there’s a lot of room for improvement,” said Cleveland.
Jay Moon, president of the Mississippi Manufacturers Association, explained that China undervalues its currency by as much as 40%.
“For example, the U.S. allows the dollar to float among international currency markets and its value fluctuates,” he said. “China doesn’t allow the same thing, and we’re unable to be competitive. Counterfeiting and the theft of intellectual property rights are also problems, which takes money right out of the pockets of U.S. manufacturers. Also, the China government subsidizes its manufacturers, allowing them to make products at less-than-competitive prices. And there are other cost factors that U.S. manufacturers must absorb, like the increasing cost of healthcare, environmental-related expenses and liability insurance. If you add them all, there’s a 22% cost differential. In addition, the requirements of getting the equivalent of the European Union CE mark in China are very elusive. There’s always one more card in a whole house of cards that China has set up for us, and that situation allows China to sell competitively to the U.S. and world markets, but we cannot sell competitively to theirs.”
Also because of budget cuts, MDA’s International Trade Office recently lost two full-time positions and some funding, said Cleveland.
“We still have a strong department with the help of partners — the World Trade Center, Hinds Community College International Trade Center and the local U.S. Department of Commerce office — filling in the gap,” she said.
Contact MBJ contributing writer Lynne W. Jeter at email@example.com.