Expansion in USA-Brazil Trade

EXPANSION IN USA-BRAZIL TRADE
ARTICLE BY ROSALIENE BACCHUS

In 2001, Goldman Sacks pushed Brazil into the limelight when the American investment banking firm coined the
BRIC acronym. As the B in BRIC, Brazil entered the club of fast-growing developing economies along with
Russia, India, and China. Since then, South America’s largest economy and the world’s tenth continues to
bloom as an agricultural and industrial powerhouse.

Between 2004 and 2008, Brazil’s economy averaged a 4.8 percent growth. This is a phenomenal achievement
when compared with the average snail-pace 2.5 percent growth of earlier decades. The collapse of the global
financial market in September 2008 has slowed the South American giant on its race forward. The World Bank
estimates that Brazil’s economic growth will slip about 0.5 percent in 2009 from 5.1 percent in 2008.

Brazil’s advances in important economic, social, and environmental policies have resulted in macroeconomic
stability, reduction in poverty, and expansion of its domestic market. Increased production and high prices for
its agricultural and mineral products accelerated export growth, resulting in trade surpluses. An expanding
presence in world markets led to increased participation in the World Trade Organization and other
international forums.

Based on export figures published by Brazil’s Secretariat of Foreign Trade (SECEX), the United States was
Brazil’s largest single-country trading partner until surpassed recently by China. Foreign trade statistics
compiled by the US Census Bureau for the period 1985 to 2008 reveal steady increases in US-Brazil trade until
2003 when trade exploded. Over the last six years, US imports from and exports to Brazil soared by 70 percent
and 188 percent respectively. With this expansion of commerce, Brazil has risen to the tenth position among
US trading partners.

Civilian aircraft, engines, equipment and parts topped America’s exports to Brazil in 2008. In descending order,
other main exports included organic chemicals; computer accessories; plastic materials; telecommunications
equipment; chemical fertilizers; semiconductors; metallurgical grade coal; pharmaceutical preparations; and
petroleum products.

In addition to pharmaceutical preparations, other American consumer products have obtained success in the
Brazilian market. Over the period 2004 to 2008, the products with the highest export growth included gems and
diamonds (438%); artwork, antiques, stamps, etc. (318%); textile apparel and household goods (292%);
records, tapes and disks (188%); rugs (187%); toiletries and cosmetics (180%); non-textile apparel and
household goods (173%); and books and printed matter (150%).

Crude oil surpassed all US imports from Brazil. Other top Brazilian imports in 2008 comprised – in descending
order – civilian aircraft; semi-finished iron and steel mill products; pulpwood and wood pulp; automotive
engines and engine parts; green coffee; other petroleum products; industrial engines, pumps, compressors
and generators; automotive parts and accessories; and other farm products (tobacco, waxes, nonfood oils).

Among consumer products, footwear held thirteenth position among US imports from Brazil in 2008. Falling by
53 percent over the period 2004 to 2008, Brazilian footwear has steadily lost ground in the US market.
Brazilian consumer products with growth over the same period include medical, dental and pharmaceutical
preparations (309%); fruits and preparations, including frozen juices (195%); soft beverages, processed coffee
and other beverages (115%); toys, shooting and sporting goods, and bicycles (63%); precious, semi-precious
and imitation gem stones (58%); and toiletries and cosmetics (54%).

Following the collapse of the global financial market in September 2008, the flow of goods between the two
trading partners slowed in 2009. US trade figures for the first semester of 2009 indicated contractions of 20
percent in exports to Brazil and 36 percent in Brazilian imports. With the prospects of global economic recovery
in the years ahead, US-Brazil trade should return to 2008 levels and continue its expansion.

Article published in the Brazil Explore Magazine, Los Angeles, California, USA, September 2009.
Reprinted with permission.

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Source: US Census Bureau, Foreign Trade Statistics