Brazil: protecting the protected
Enviado: 04 Jun 2012, 11:42
Ivan Ramalho does not think the government of Brazil is becoming more protectionist.
But the head of Abece, Brazil’s industry group representing international trading companies, says there are some sectors that are becoming more protectionist and some of them have the government’s ear.
“There is an intent that exists today, not in industry as a whole, but in some specific sectors towards more protection,” he said. “They want, of course, more protection and with more protection, prices will increase.”
Anyone who lives in Brazil and has visited a supermarket or a car showroom knows there is much truth to this.
The lucky people who travel, including many senior government ministers, do their shopping overseas. So expensive are the most ordinary items in Brazil that many residents now bring items as ordinary as dental floss, peanuts or other groceries back from their journeys abroad. Only the desperate or stupid would shop in Brazil out of choice – or of course, those who want to show off how much they earn.
Brazil’s rising tendency towards protecting domestic industry with ever higher taxes on imports only seems to worsen the problem – no matter how expensive imports become, it seems that the prices of domestic products are never far behind. In fact, they are usually far ahead. Locally produced vehicles, for instance, are often three times more expensive in Brazil than in the US and even than in neighbouring South American countries. And they often don’t come with airbags.
Ramalho argues that in many cases, Brazilian producers are not responsible for this. The notorious “Brazil cost”, the toll exacted by the country’s regime of burdensome taxes, poor logistics, high interest rates, a strong currency and soaring labour costs, plays an equally important role.
“Brazilian industry, inside the factory, is competitive. The problem is when the product leaves the plant,” he said.
So is Brazil quantitatively becoming more protectionist compared with other countries? The answer is, perhaps surprisingly, no – especially when compared to most other major economies.
According to a report by the World Economic Forum , Brazil ranked ninth in terms of the number of discriminatory trading measures imposed in 2011. First ranked was the European Union, followed by Russia, Argentina, the UK, Germany, India, China and France with Italy in 10th place.
The problem, therefore, is not the quantity of the protectionist measures but who is being protected. Better would be to work together with car manufacturers to make their over-priced offerings cheaper or with shoemakers to develop products that are competitive on the global market, or with textile producers to reskill workers whose jobs are being taken away by competition from lower cost Asian countries.
Indeed, at some point, this whole discussion around competitiveness is a debate that Brazil will need to have. At risk is its longer term prosperity.
http://blogs.ft.com/beyond-brics/2012/0 ... protected/
But the head of Abece, Brazil’s industry group representing international trading companies, says there are some sectors that are becoming more protectionist and some of them have the government’s ear.
“There is an intent that exists today, not in industry as a whole, but in some specific sectors towards more protection,” he said. “They want, of course, more protection and with more protection, prices will increase.”
Anyone who lives in Brazil and has visited a supermarket or a car showroom knows there is much truth to this.
The lucky people who travel, including many senior government ministers, do their shopping overseas. So expensive are the most ordinary items in Brazil that many residents now bring items as ordinary as dental floss, peanuts or other groceries back from their journeys abroad. Only the desperate or stupid would shop in Brazil out of choice – or of course, those who want to show off how much they earn.
Brazil’s rising tendency towards protecting domestic industry with ever higher taxes on imports only seems to worsen the problem – no matter how expensive imports become, it seems that the prices of domestic products are never far behind. In fact, they are usually far ahead. Locally produced vehicles, for instance, are often three times more expensive in Brazil than in the US and even than in neighbouring South American countries. And they often don’t come with airbags.
Ramalho argues that in many cases, Brazilian producers are not responsible for this. The notorious “Brazil cost”, the toll exacted by the country’s regime of burdensome taxes, poor logistics, high interest rates, a strong currency and soaring labour costs, plays an equally important role.
“Brazilian industry, inside the factory, is competitive. The problem is when the product leaves the plant,” he said.
So is Brazil quantitatively becoming more protectionist compared with other countries? The answer is, perhaps surprisingly, no – especially when compared to most other major economies.
According to a report by the World Economic Forum , Brazil ranked ninth in terms of the number of discriminatory trading measures imposed in 2011. First ranked was the European Union, followed by Russia, Argentina, the UK, Germany, India, China and France with Italy in 10th place.
The problem, therefore, is not the quantity of the protectionist measures but who is being protected. Better would be to work together with car manufacturers to make their over-priced offerings cheaper or with shoemakers to develop products that are competitive on the global market, or with textile producers to reskill workers whose jobs are being taken away by competition from lower cost Asian countries.
Indeed, at some point, this whole discussion around competitiveness is a debate that Brazil will need to have. At risk is its longer term prosperity.
http://blogs.ft.com/beyond-brics/2012/0 ... protected/
