Export to grow

Arnaldo Jardim*

Over the past ten years, Brazilian exports of soybeans doubled, meat fivefold, sugar tripled, leather and footwear were in the same line of growth, just to cite some examples, within a general advancement of our exports. The absence of a consistent export policy was not enough to appease the determination and effort of the national productive segment. This year, a new international economic situation is shaped up and there are two dangers that can compromise our economic stability: the fall of surplus of the trade balance and the failure of the Doha Development Round to opening up international trade.

It is no secret that agribusiness is the driving force of our exports. In 2007, the agribusiness accounted for 93% of trade surplus, which reached US$ 46 billion. Despite Brazilian exports have grown 17%, with volume of US$ 161 billion, this was not enough to improve our participation in the global market, in which we occupy the modest 23rd position in the world ranking, with only 1.2% of the total. Thus, we are in the last place between so-called Brics (main emerging economies). Exports from China grew 26% in the last year, those of India, 20%. Brazil was like Russia. The Brazilian performance in exports was also slightly worse than the average of countries of Mercosur (Argentina, Brazil, Paraguay and Uruguay), which reached 18%.

In the first half of 2008, the balance of external accounts submitted its worst result since 1947. According to the Central Bank (BC), the current transactions registered a deficit of US$ 17,402 billion. The semester deficit results, principally, from the positive trade balance of only US$ 11,349 billion (a significant fall of 44.7% versus the same period of 2007 - US$ 20,5 billion), added to a deficit of US$ 30,603 billion in services and income account (expenditure of the country abroad and spending with interests) and unilateral transfers of US$ 1,852 billion in the period.

Allied to this, the Doha Development Round, in which Brazil would be one of the favoreds, sank. After seven years of negotiations, the 153 WTO members failed to reach a consensus, even in face of inflationary pressure on prices of food throughout the world.

Studies of the CNA (Confederation of Agriculture and Livestock of Brazil) and of the Institute for Studies of Commerce and International Negotiations (Icone) indicate that if the Doha final proposal was approved, the agriculture gain for the country would be of about 5 billion, representing an increase of nearly 190% in Brazilian exports of bovine meat, chicken and ethanol for the two largest markets in the world, USA and European Union (EU). The director of the WTO, Pascal Lamy, estimated also that countries wasted US$ 130 billion per year in benefits, in the form of reduction of agricultural and industrial import tariffs, of which 70% would be with the developing nations.

For us, there are still some important lessons. First, it was clear that there was some naivety of Brazilian business strategy to focus exclusively on the Doha Development Round. In a world where local interests are predominant, it is increasingly difficult to reach multilateral agreements. This position may cause the risk that Lula government complete eight years without any relevant trade agreement. Meanwhile, though belated, diplomacy realized, finally, the peculiarities of trade negotiations and knew how to untie the purely ideological ties in order to defend the Brazilian economic interest. Such lesson also serves to negotiations within the Mercosur, eroded by disputes between its members, who cannot establish a common agenda for negotiations. A responsibility that increase as the Brazil must return its attention to resume "from scratch" bilateral negotiations, as an alternative to maintain growth in its exports.

The failure of the negotiations for the opening of international markets and the low participation of Brazil in international trade highlight the challenge of mitigating the so-called "Brazil Cost", evidenced by historical situations in terms of transport and logistics, the tax issue and, more recently, the exchange rate valuation.

In this respect, we are abusing the recovery exchange rate as an instrument to combat inflation. Over every month, the numbers of the payment balance are worst. The rhythm of growth of the imports largely exceeds the exports. The market projections show a deficit of US$ 25 billion in 2008, and US$ 33 billion in 2009.

Another challenge is to add value to our exports, in fact, the reason pointed out by experts for our low participation in the global market. The Industry PAC (Growth Acceleration Program), very announced by Lula government, continues to walk in slow steps, and investments in innovation are an article of luxury in the productive segment. To enlarge its slice, the country would have to invest more in manufactured products!

The segments of leather and footwear, for example, move more than US$ 2 billion per year of export, but suffer from a lack of a more assertive export politicy, to compensate the loss of competitiveness in terms of exchange and interest rates. Thus, we could be able not only to face the Chinese competition, but also to add value to exported products, as Brazil cannot be a mere exporter of raw materials that are transformed into manufactured to compete here and abroad with Brazilian products.

The failure of Doha may not outrageous , in face of growing worldwide demand for agricultural products. But Brazil has an obligation to do its homework, changing its excessively monetarist economic policy. Besides the exchange rate policy and investment in innovation, issues such as investment in health protection, tax reform and trade promotion activities, if they were a necessity, now they are crucial. After all, to grow, we need to export!

 

*Arnaldo Jardim – federal deputy and leader of the PPS, member of the Parliamentary Front in Defense of Industry of Leather and Footwear.

 

Revista Courobusiness, Ed. 59 Jul/Ago 2008.