(12/18/2015) “After Brazil end 2014 with the worst trade deficit since 1998, with a deficit of US$3.93 billion, the report’s projections Focus, the Central Bank indicate to a US surplus $15 billion this year. The improvement in the external accounts, however, has little to do with an increase of the country’s participation in the foreign market via exports and, even with a decrease in the volume of imports.

With the downturn in the economy and the dollar climbing, purchases abroad fell 23.1% in the year to November, compared to the same period 2014, while international sales recorded a smaller decline of 14.9%, according to Ministry data of Industry and Foreign Trade (MDIC).

“This positive balance in the balance tastes bitter. It was not competitiveness has improved the result. The positive balance was caused by degenerative factors,” says Professor at the University of Brasilia (UNB) Jorge Arbache.

With the absence of the country in global value chains, which are the set of activities required for production and delivery of the product to the consumer, the economist believes that the appreciation of the dollar, which is up 40% this year, only has effect “topic”, and for commodity exporters.

In the case of the largest exporter of refined copper in the country, Paranapanema, the currency appreciation is offsetting the downturn in the domestic market. With the recession in the country, down industries that demand much copper, such as construction, the company directed its production abroad. The share rose to 56% this year, compared to 37% in 2014. “Our cost of currency is the real. We are more competitive,” says the president, Christophe Akli.

According to the executive, the reduction in copper prices, which fell below US $ 5000 per ton for the first time since the 2008 crisis did not affect the company. “Who takes the loss are the mines, we add value by transforming the copper rods, wires, tubes,” said Akli.

More than the issue of the dollar, the reason for Paranapanema succeed in foreign trade is precisely related to the company’s ability to add value to your product. And this is precisely one of the bottlenecks of the Brazilian competitiveness.

Ranking second in the World Economic Forum, Brazil had the worst performance among the 140 nations included in the global list of competitiveness in 2015. When falling 18 positions, the country reached 75th place, surpassed by other emerging market as Mexico and India.

The low competitiveness of the country, experts say, explains the weak participation of Brazil in international trade. According to data of the World Trade Organization (WTO), Brazil’s share fell to 1.2% in 2014, down from 1.3% in 2013. To give you an idea, the best time of Brazil in international exports since 2005 was in 2011, when accounted for 1.4% of the total share of global trade pie.

“Countries such as Thailand and Malaysia are more slices than ours. This is a reflection of how disproportionate is our competitiveness,” says economist of the Institute of Studies for Industrial Development (Iedi), Rafael Cagnin.

In the view of professor at the University of São Paulo (USP), Celso Grisi, factors such as poor logistics infrastructure and the so-called ‘Brazil cost’, which includes high taxes and heavy bureaucracy are bottlenecks that toppled the Brazilian competitiveness. “To conquer markets, we need to move competitors and this requires investment. But how to invest in a stress scenario and the credit crunch?” He asks.

Industry: The low participation of Brazil in international trade also relates to the drop in the industry’s share of exports, evaluates Rafael Cagnin, the Iedi. The share of manufacturing fell from 53% in 2005 to 34% last year, with the increase in the share of fuels, minerals and agricultural products, which are now the main group of goods, with 40% share.

“The decline in exports of manufactured goods is more a reflection of the domestic industry crisis,” explains Cagnin.

But to face a strong decline in sales and production, the industry was also impacted by increased costs due to the increase of energy, which is up nearly 50% in 2015, and prices of imported inputs. The result was a worsening crisis in the sector. According to a survey of Iedi, based on data provided by the WTO, the Brazilian industry accounted for only 0.61% of manufactured goods in global trade, up from 0.85% ten years ago. ”

To access the article in the O Estado de São Paulo’s website click here.