DATE: Sunday, October 5, 1997               TAG: 9710040572

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER 

                                            LENGTH:  128 lines

PORTS LOOK TO SOUTH AMERICA IF FAST-TRACK IS APPROVED AND THE CLINTON ADMINISTRATION SUCCEEDS INNEGOTIATING FREE TRADE ACCORDS WITH SOUTH AMERICAN NATIONS, IT WOULD MEAN MORE BUSINESS AND MORE JOBS FOR THE PORT OF HAMPTON ROADS.

Every week, nearly a dozen ships motor into the port of Hampton Roads laden with goods from South America, such as auto parts for Detroit carmakers and tobacco for Philip Morris in Richmond.

It's the port of Hampton Roads' fastest growing trade lane, with tonnage increasing nearly 40 percent a year, port officials say. Such growth has made Hampton Roads the largest East Coast port for trade with South America.

The trade boom could be redoubled if the United States can negotiate agreements to lower trade barriers with Latin America.

With an eye toward South America, President Clinton has asked Congress to give him ``fast-track'' authority for negotiating trade agreements. A trade treaty negotiated under fast-track can only be approved or rejected in its entirety by Congress. Amendments, the thinking goes, could cause delicate deals to collapse.

The issue has become a political hot potato, in large part because of questions about what place labor and environmental issues have in trade talks.

But setting aside such questions, if fast-track is approved and the Clinton administration succeeds in negotiating free trade accords with South American nations, it would mean more business and more jobs for the port of Hampton Roads.

According to a study by two Old Dominion University economists, every 531 tons of containerized cargo creates a job in the port of Hampton Roads.

``If you open up trade with other countries, you'll spur trade, which will generate more business and create more jobs in the port,'' said Phil Newswanger, director of business development for the Virginia Port Authority. ``South America is booming. It's our fastest growing market.''

And South America is precisely the market that President Clinton wants to open up. His first priority is to negotiate a deal with Chile, said David Miller, a State Department official.

Chile is seen as a first step toward developing the Free Trade Area of the Americas, involving most of the Western Hemisphere, said Miller, the special assistant to the senior coordinator for business affairs at the State Department.

That would involve hammering out a trade deal with the Mercosur nations, a free trade group including Argentina, Paraguay, Uruguay and Brazil. Brazil is the United States' largest trade partner in South America, as well as the port of Hampton Roads' largest South American market.

``We're concerned that if we fail to have fast-track in place we're going to fall behind our competitors, and the costs are going to be in lost jobs and lost exports,'' Miller said.

Mercosur and the European Union recently agreed to negotiate a trade pact by 1999.

``We clearly don't want to stand on the sidelines as Europe gains greater access to South America,'' Miller said. ``We feel that our global leadership and future competitiveness is at stake.''

The lack of fast-track is holding up negotiations with Chile, which already has trade agreements with all the major economies in the Americas except the United States, Miller said. As a result, U.S. exporters to Chile face tariffs an average of 11 percent higher than their competitors elsewhere in the Americas, he said.

This isn't a good time to be on the sidelines in trade with South America, observers say.

A recent study concluded that ``Latin America's role in the post-Cold War world order is being shaped by economic dynamism, more effective diplomacy and a cultural explosion. . .

``The region in all its complexity is undergoing significant structural changes, and many of the current economic - and political - reform programs are providing the foundations of a hemispheric revival that, if successful, will carry into the next century,'' wrote Scott B. MacDonald, of the Wall Street firm Donaldson, Lufkin and Jenrette, and Georges A. Fauriol, of the Washington think tank Center for Strategic and International Studies.

In their report, ``Fast Forward: Latin America on the Edge of the 21st Century,'' MacDonald and Fauriol argue that the region is about to boom and, in terms of development, is about where the so-called Asian Tigers were a generation ago.

Unlike many other developing nations in the world, Brazil, Argentina and Chile already have established middle classes with the money to buy goods, said the Virginia Port Authority's Newswanger. They are also blessed with abundant natural resources.

Perhaps it's a leftover feeling of Monroe Doctrine, laid out by President James Monroe in 1823, but ``there is a sense that South America is a natural market for the U.S.,'' Miller said.

It certainly has become a natural market for the port of Hampton Roads, which markets itself as the gateway to the United States.

Most of the lines sailing north from South America make Hampton Roads their first or second U.S. stop, Newswanger said. That's helped make Hampton Roads by far the largest East Coast port for South American imports.

Hampton Roads is also among the top three ports for exports, though Jacksonville, Fla., is the clear leader because it is typically the last U.S. port of call for many lines on the trip south, Newswanger said.

Nearly all of Hampton Roads' South American trade is with ports on the continent's East Coast, primarily with the Mercosur nations of Brazil and Argentina, Newswanger said.

While a trade agreement with Mercosur would help the port most, opening a deal with Chile could also be a boon as the port works to attract the Chilean lines that serve South America's West Coast, Newswanger said. Port officials wrapped up a trade trip to South America in June with a visit to Chile to make such a pitch.

In a trend that will likely benefit Hampton Roads, shipping lines that sail to South America are beginning to take many of the same cost-saving moves that major lines that trade to Europe and Asia have, Newswanger said. They are adding larger vessels, forming shipping alliances with other lines and reducing the number of ports they call.

Just this year, Crowley American Transport, one of the largest north-south lines, replaced three smaller ships with larger ones, giving it six vessels with a capacity of 2,000 containers each. The Jacksonville-based line recently added a seventh, even larger, ship and agreed to sell space on its ships to American President Lines, one of the largest shipping lines in the world.

Such moves among the lines that sail to Europe and Asia have helped make Hampton Roads the second largest port on the East Coast after New York. Thanks to Hampton Roads' proximity to the sea, deep channels and strong rail connections to the Midwest, many shipping lines consolidated service to this port at the expense of ports like Baltimore and Philadelphia.

Hampton Roads' share of the trade with South America's East Coast is growing more than three times faster than the overall trade. While the South American trade grew 12.4 percent for U.S. East Coast ports in 1995, Hampton Roads saw 39.6 percent growth, according to the Virginia Port Authority. ILLUSTRATION: Graphic

Map

Graphic by ROBERT D. VOROS, Text and research by CHRISTOPHER

DINSMORE, The Virginian-Pilot

SOURCE: Virginia Port Authority

[For complete graphic, please see microfilm]

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu