Exportation: A Need to React

While the media, rightly so, is concerned with addressing the consequences caused by the coronavirus pandemic (COVID-19), we cannot ignore issues related to foreign trade or put this topic on hold because the recovery of the country will fundamentally depend on how it will face the financial exhaustion of other nations. At some point, it is clear that there will be no resources to address the economic slowdown that the world will go through, a situation similar to the post-World War II period (1939-1945).

In other words, this is the moment for Brazilian entrepreneurs to assume their role in managing the crisis. As Swiss-Brazilian entrepreneur Jorge Paulo Lemann, considered in 2019 by Forbes as the second richest man in Brazil, said, situations like the current one are where great opportunities arise that can improve the country’s condition by increasing the number of trading partners, not only with agricultural commodities and iron ore but also with low and medium technology products.

Therefore, we can no longer consider the argument that the limited growth of our international trade is due to the protectionism that more advanced countries give to products in which Brazil could be more competitive. In fact, this does not justify the fact that Brazil exports less than half of what a country with a similar national income to ours should do, ranking a modest 27th in the World Trade Organization’s (WTO) exporter ranking. Just consider that our trade volume is now less than a quarter of that practiced by South Korea, the fifth-largest exporter, and a third of that practiced by Mexico, ranked 13th.

In light of this, a strategy needs to be established to recover some of the exports of low and medium technology products that are currently mainly in the hands of Asian countries. This situation has even caused serious supply problems because, due to the pandemic, the demand for masks and clothing for doctors and nurses has forced buyers to queue up at Chinese airports, awaiting their orders, many of which have been canceled due to a lack of production to meet demand.

Therefore, considering that the exchange rate of the dollar against the Brazilian real is highly favorable for “Made in Brazil” products, this is the time for exporters to make an effort to accelerate sales abroad by adopting a more aggressive policy. At the same time, the government needs to do its part by reformulating the current tax system, which is burdensome and reduces gains in productive activity and for workers, and by creating credit programs to stimulate the modernization of machinery and equipment in the agricultural and industrial sectors.

It should be remembered that Brazil has always had an exporting spirit, and its entrepreneurs used to participate more actively in trade shows with the support of previous governments in promotional campaigns for our products. However, this situation has been abandoned in recent years under the false pretext that if our product lacks competitiveness, there is little point in promoting them abroad or participating in trade shows. Instead of focusing solely on agribusiness, one can imagine a campaign that adds value to raw materials. As an example, one can cite the case of coffee: how many machines and coffee capsules could Brazil have sold if there were integration between coffee producers and equipment manufacturers?

In other words, until Brazil overcomes the obstacles that are right here, it will be of little use to combat the barriers raised by richer countries.

---

Milton Lourenço (1953-2020) was the founder of the Fiorde Group, consisting of the companies Fiorde Logística Internacional, FTA Transportes e Armazéns Gerais, and Barter Comércio Exterior (trading company). Email: fiorde@fiorde.com.br. Website: www.fiorde.com.br.

Return to Blog