São Paulo – The European crisis should affect the price of commodities, the main export product from Brazil, and cause a reduction of around 7% in foreign sales from the country. This information was presented by José Augusto de Castro, the acting president of the Brazilian Foreign Trade Association (AEB), who gave talk "Perspective for World and Brazilian Foreign Trade", on Tuesday (17), at the offices of the Arab Brazilian Chamber of Commerce, in São Paulo.
"The European crisis made the price of commodities drop. This should make exports drop because, with the lower commodity prices, Brazil will automatically have exports reduced,” said the executive. According to him, the reduction in commodity prices, which represent 71% of national exports, should also affect foreign sales of manufactured products.
"Our greatest buyers of manufactured products are commodity exporters. With the reduction of commodities their import power has reduced, so they have started buying less. That is bad for Brazil because we export basically manufactured products to the countries of South America, which are all commodity exports,” he pointed out.
The concentration of Brazilian exports on commodities was one of Castro’s main criticisms to Brazil’s foreign trade as a whole, and also to the Arab countries. "The demand is for commodities. We should ideally have at least equal participation. If there are market niches, you will find them,” he said, mentioning the interest of small companies abroad in exports and imports of manufactured products. “It is necessary to go to the market, to learn about it locally,” he pointed out.
China (17%), the United States (10%), Argentina (8.87%), the Netherlands (5.33%) and Japan (3.70%) are the main destinations for domestic exports. Among the Arabs, the main buyers from Brazil are Saudi Arabia (1.36%), Egypt (1.02%), the United Arab Emirates (0.85%), Algeria (0.58%) and Morocco (0.32%). "The Arabs have a high trade deficit with Brazil and want a share of the Brazilian market,” recalled Michel Alaby, CEO at the Arab Brazilian Chamber. Three Arab nations alone presented a surplus in foreign trade with Brazil: Algeria, Kuwait and Morocco.
Despite pointing out the importance of greater exports of manufactured products, Castro pointed out that in coming years there should be greater demand for foods in markets like India and China, which are reducing their rural populations. “Brazil is fortunate to have Embrapa [the Brazilian Agricultural Research Corporation]. With the technology developed by the organisation, the country increased production in recent years without increasing its cultivated area.”
To Castro, Brazil needs to be more aggressive in its international trade strategies, participating in fairs abroad and sending representatives to learn about the markets in which they aim to enter, for example. "We do not have export culture. We do not have export consortia. This would result in greater strength for small and medium exporters, which have capacity,” he said.
According to AEB figures in Brazil, of the 4.5 million existing companies, only 19,100 are exhibitors. "Of these, 934 companies concentrated 92% of Brazilian exports,” shows the AEB president.
As internal challenges to growth of international trade, he also lists the need for establishment of a unified foreign trade policy, not suffering the influence of several spheres of the government, a tax reform and the solution of logistics bottlenecks in the country.
*Translated by Mark Ament
