Trade and industrial policies in Brazil: drivers, recent evolution, trends and lessons from Korea

Transcription

1 Trade and industrial policies in Brazil: drivers, recent evolution, trends and lessons from Korea Santiago, Jan., 2015 Sandra Polónia Rios

2 Structure of the comments 1. The drivers of trade and industrial policies (TIPs) in Brazil. 2. The external economic policies under Lula 3. The post-2008 TIPs: main trends and drivers. 4. Some questions looking ahead / lessons from Korea

3 The drivers of Brazil s trade and industrial policies - 1 Domestic drivers have played a major role in shaping Brazil s trade & industrial policies (TIPs) and in explaining their stability over time, despite huge policy and political shifts. Main domestic drivers of TIPs: Identification of the industrialization process to the national project, widely shared by politicians, academics, business and trade unions. Dominance of import-competing industrial sectors in the political economy of the TIPs. Defy Comparative Advantages (1 st difference from Korea)

4 The drivers of Brazil s trade and industrial policies - 2 Industrialization stimulated by IS + FDI friendly approach, particularly in the industrial sector (2 nd difference with Korean strategy). Focus on the domestic market. Export promotion not a permanent priority (3 rd difference with Korean case). Main objective of the external economic policies: preserve policy space. Implications: protectionist bias in TIPs (survived trade liberalization in the 90 s), lack of engagement in ambitious trade FTA and, so far, limited room for global governance issues.

5 TIPs in the 90 s: the liberal phase Unilateral trade liberalization between 1990 and 1993 (3 years in Brazil, 11 in Korea): reduction of tariffs, but tariff escalation remains. First engagement of Brazil in an ambitious regional integration scheme: Mercosur => setting of a custom union / common external tariff based on Brazil s tariff. In the second half of the 90 s, negotiations with the US (within the framework of FTAA) and the EU: Brazil to the edge of a new liberalization cycle.

6 External economic policy under Lula Changes in the negotiated trade policy North-South negotiations loose priority. Emphasis on South-South negotiations, but with limited economic results: (i) shallow trade agreements with India and South Africa; and (ii) deepening of ALADI trade agreements in South America. Mercosur: lack of progress, and some setbacks. Brazil s emergence as a relevant international player in the economic arena: WTO, climate change negotiations.

7 The post-2008 TIPs: the end of optimism From the crisis on, unilateral trade policy becomes more active From 2010 on, the appreciation of the Real and the growing competition with manufactured goods imported from China generate strong demands for protection. The risks of de-industrialization and Dutch disease set the tone of the debate on trade and industrial policies. Main consequence of this new context: end of optimism + EEPs again tightly conditioned by the domestic economic concerns.

8 Brazilian Industry: imports and exports coefficients Fonte: CNI - Elaborado pela Funcex a partir de dados do IBGE e FGV

9 Some questions looking ahead The competitiveness and productivity agendas are coming back to the stage. But these agendas conflict with a growth model based on incentives to consumption and suffering from low investment and savings rates. Divergence between structural trends (pushing Brazil towards its natural comparative advantages goods and services related to natural resources) and policy preferences set by the industrialist project this divergence will dominate the political economy of TIPs in the next years.

10 Protection to production goods Tarifa aduaneira média de bens de capital e bens intermediários: países e anos selecionados (%) Bens de capital Bens intermediários Brasil 16,9 13, ,9 10,7 11,7 China 14,4 8,1 7,7 14,4 7,9 7,4 Coreia 7,2 5, ,2 11,1 Filipinas 4,2 2,8 2,9 5,9 5 4,9 Índia 26,7 14,1 8,4 32,7 17,4 10 Indonésia 4,4 3,8 5,5 7,3 6,1 6 Malásia 5,1 4,2 3,6 7,1 6,8 6,6 México 13,1 9,5 3,2 14,8 11,8 6,1 Tailândia 10,5 6,4 5, ,4 Fonte: Baumann e Kume (2013)

11 Lessons from Korea Overvaluation and its impacts on trade flows Export led growth as a permanent goal Import liberalization as an instrument to export s expansion Participation in relevant FTAs / TAA to deal with potential negative impacts of FTAs Doubts: the role of Education in the Korean Miracle? FDI (inward and outward)? How to integrate agriculture to trade liberalization?

12 Thank you