Estimating the economic impact of hosting the administrative headquarters for the proposed Free Trade Area of the Americas in Miami is proving as controversial as the treaty itself.

The group promoting Miami as the home of the FTAA claims that if the secretariat were put in Miami, Florida would gain almost 90,000 jobs and billions of dollars in economic impact.

But some economists say the figures are wishful thinking. And opponents of the FTAA say the state-sponsored impact study is hype and propaganda aimed at raising money to boost Miami’s chances and to promote the creation of the FTAA.

The executive director of FTAA Florida, Jorge Arrizurieta, defended the study his group is using. He said the study used accepted economic analysis and forecasting models and insisted that the study is an effective way to educate the business community about potential opportunities.

“ It certainly has helped for fund-raising from the standpoint that it helps business understand the economic impact that this effort has on the entire state of Florida, not just South Florida,” he said.

Opponents argue the projections are part a campaign by Florida FTAA, a nonprofit group established by Gov. Jeb Bush, to build statewide support for the hemispheric trade treaty even though two Florida industries — citrus and sugar — could be devastated by the increased competition from cheap imports from Brazil and other Latin American countries.

“ It is meant to undermine the serious debate about what the impact of the FTAA will be on Florida,” said Thea Lee, chief international economist for the AFL-CIO, which opposes the FTAA. “If you think there are 89,000 jobs at stake for your state, you might be willing to overlook some of your issues with the FTAA.”

Atlanta, which is also in the running for the FTAA secretariat, has published an economic impact study with surprisingly different conclusions. It claims that the secretariat would create just 27,000 jobs in Atlanta. Tom Tanner of the University of Georgia’s Institute of Government, who
authored the Atlanta study, said that Florida’s large trade industry makes the state better-suited than Georgia to benefit directly from the FTAA, but he still thinks the 89,259-job figure is suspect. “They are definitely being more optimistic than me,” he said.

Miami is competing with at least three other cities including Panama City, Panama, for the chance to host the permanent FTAA secretariat should the treaty be ratified.

Brussels, but different

The numbers are flawed because the study considers positive factors, Lee said, and because it fails to include Florida jobs that would likely move offshore.

Florida lost 12,000 jobs with the launch of the North America Free Trade Agreement that the U.S. signed with Mexico and Canada, Lee said. She said Florida can expect to lose at least that many with the FTAA, which includes 10 times as many countries.

But the authors of the study fault critics of the reverse, failing to consider the true impact of the FTAA and of having the secretariat in Miami. Sena Black, a senior vice president for Enterprise Florida, the state’s public-private economic development authority worked on the study for six
weeks. She said Miami and Florida could feel the same economic impact as Brussels after it was selected as the capital of the European Union. That city experienced accelerated growth in the professional services sector, and Black envisions a similar scenario for Miami and Florida, but built around trade rather than government.

The study estimates that 89,259 jobs would be created statewide if a proposed free trade zone for the 34 democratic countries in the Western Hemisphere is established and administered from Miami. More than 58,000 of the projected jobs would be in trade and trade-related industries. With an average salary of $35,662, the jobs are projected to add about $3.2 billion to Florida’s annual payroll.

Lee said the estimate that 58,273 trade-related jobs will be created is absurd. “It is based on a projection that Florida exports will triple over the next 10 years,” Lee said. “They are assuming that imports grow by zero, but it is two-way trade agreement.”

What economists say

Agricultural, apparel and manufacturing jobs are all likely to leave this country faster if the FTAA is launched, Lee said.

U.S. producers contend that their production costs are higher than most other countries because they must adhere to the most stringent labor standards in the world. This difference makes it impossible for the United States to eliminate protective trade tariffs and quotas until other countries are required to adhere to similar labor rules.

Citrus and sugar account for 115,000 jobs and $12.1 billion in economic impact for Florida, said spokeswoman Judy Sanchez of U.S. Sugar Corp., one of Florida’s largest sugar and citrus producers. Many of those jobs would be eliminated if the FTAA is approved and most agricultural tariffs, quotas and subsidies are eliminated.

The FTAA Florida study does not take this into consideration, Lee said. “ There is a difference between the FTAA going forward, and sugar and citrus being sacrificed,” Sanchez said. “You can have a successful free trade agreement that doesn’t sacrifice Florida sugar and citrus.”

Black said Florida stands to gain thousands of jobs because of its role as the shipment hub of the Americas.

She concedes that some jobs may be lost. “What you are looking at is the average,” she said, adding that the job estimate is a net gain for the first 10 years after the treaty is launched.

Sanchez said the agriculture issues affect every country in the world, so the terms should be negotiated at the World Trade Organization level rather than the regional FTAA level.

FTAA opponents contend the study’s findings were sweetened to make it easier to attract business contributions for the state team spearheading an effort to bring the permanent secretariat to Miami.

“ If you look at the stock market and the various scandals going on, the numbers always seem to be inflated in order to get greater investment,” said Eric Rubin, president of Florida Fair Trade Coalition, a St. Petersburg group that opposes the FTAA. “It seems almost systemic. We wonder if they are any different.”

Black denied that notion. She said the study is based on a five-tier approach that relied on data and input from the U.S. Commerce Department and Florida economists. Miami economist J. Antonio Villamil, the vice chairman of Florida FTAA, contributed to the study. He did not return calls seeking comment.

Economist David Givens of the research and forecasting firm Economy.com and whose firm is not involved in the debate over the FTAA, questioned some of the numbers.

He evaluated the study at the request of the Daily Business Review. He said the 89,259 jobs could be feasible over the 10-year time frame the study used, but not necessarily the way the state forecasts.

He said the those jobs represent only a fraction of the 2.2 million jobs that his firm estimates will be created in Florida between 2005 and 2015 when the number of workers in the state reaches 9.8 million.

Givens also questions whether 97 percent of the jobs would come from trade and Florida’s enhanced brand value on business development because those figures are hard to substantiate.

“ The FTAA is not a done deal,” he said. “It may not go through, period. Assuming it goes through, it would definitely have a huge positive economic impact for Miami, and Florida as well. I sympathize with their effort to try to quantify the impact.”