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Exchange rate and international trade World Double Asymmetry in RER:

Exchange rate and international trade World Double Asymmetry in RER: the Brazilian case since 2000 Josue Gomes da Silva President of COTEMINAS. WTO, March 27 th , 2012. 1. Brazil and the World. 2. Brazilian GDP growth. 3. 3. GDP growth: international comparison.

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Exchange rate and international trade World Double Asymmetry in RER:

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  1. Exchange rate and international trade World Double Asymmetry in RER: the Brazilian case since 2000 Josue Gomes da Silva President of COTEMINAS WTO, March 27th, 2012. 1

  2. Brazil and the World 2

  3. Brazilian GDP growth 3 3

  4. GDP growth: international comparison * IMF estimates for Brazil and India 4 4

  5. Brazil: International Trade 5 5

  6. Manufacturing in Brazil 6 6

  7. Manufacturing Output 7 7

  8. Manufacturing Output 8 8

  9. Brazil: International Trade 9 9

  10. Brazil: International Trade 10 10

  11. Brazil: International Trade 11 11

  12. Import penetration and Export coefficients in Brazil 12 12

  13. International trade: Trade openness * Accumulated in four quarters until the recent quarter 13 13

  14. Brazilian Bottlenecks 14 14

  15. Brazilian bottlenecks • The highest world’s interest rate • The “Brazilian Cost”: energy costs, taxes, logistic, bureaucracy. • Inter-states tax competition • Exchange rate 15 15

  16. Exchange Rate 16 16

  17. The Big Mac Index 17 17

  18. Deviations on Real Exchange Rates 18 18

  19. Exchange Rate Misalignment 19 19

  20. Tariff Profile 20 20

  21. Brazil: Tariff Profile 21 21

  22. Brazil: Tariff Profile 22 22

  23. Brazil: Tariff Profile 23 23

  24. Consequences 24 24

  25. Sectoral Analysis: case studies 25 25

  26. Machinery and Equipments 26 26

  27. Machinery and Equipments 27 27

  28. Machinery and Equipments Import penetration in apparent consumption – Machinery and equipments, 2004-2010 Main indicators: accumulated variation – Machinery and equipments, 2004-2010 Source: IBGE, Funcex, in ABIMAQ (2011). 28 28

  29. Electronic machinery and equipments 29 29

  30. Electronic machinery and equipments 30 30

  31. Electronic Machinery and Equipments Import penetration in apparent consumption – Electronic machinery and equipments, 2004-2010 Main indicators: accumulated variation – Electronic machinery and equipments, 2004-2010 Source: IBGE, Funcex, in ABIMAQ (2011). 31 31

  32. Pulp and Paper Source: IBGE. *Employment does not include pulp 32 32

  33. Pulp and Paper 33 33

  34. Pulp and Paper Import penetration in apparent consumption – Pulp and Paper, 2004-2010 Main indicators: accumulated variation – Pulp and paper, 2004-2010 Source: IBGE, Funcex, in ABIMAQ (2011). 34 34

  35. Textile 35 35

  36. Textile 36 36

  37. Textiles 37 37

  38. Exchange Rate Debate in WTO 38 38

  39. Exchange Rate Debate in WTO • Double Asymmetry in exchange rate is a Brazilian case nowadays, but it is a general issue • Exchange rate is a sovereign decision • RER belongs to the scope of IMF Should the WTO participate on the discussion? 39 39

  40. Exchange rate debate in WTO • The private sector expects it to be • Proposal for debates: • What is the best policy instrument to deal with double asymmetry problems? Anti-subsides? Safeguards? Antidumping measures? • Let’s think about mechanisms that neutralize exchange rate effects over international trade (beyond tariff palliatives) 40 40

  41. Conclusion • The double asymmetry problem exits • It is a severe issue, it is provoking adjustments that are not recoverable in the long run. • This issue interests every country, today is a Brazilian problem, but tomorrow… • It has to be faced, otherwise countries will create own solutions against the distortion • Tariff war and a protectionist international wave must be avoided 41 41

  42. Thank you 42 42

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