Pace of growth decelerates; U.S. exports rebound; Brazil - World Trade Outlook

U.S. exports to Brazil jumped almost 30 percent during the first six months of this year, to $1.4 billion. This was due to a somewhat less strict import policy made possible by Brazil's continued export success, coupled with progress in reducing oil imports. The U.S. share of total Brazilian non-oil imports rose from 30 to 36 percent during the same period. If these growth rates hold steady for the balance of 1985, it would mean an additional $740 million in U.S. exports to Brazil this year compared to last.

While Brazil's full-year 1985 trade surplus will not match the record 1984 level of $13 billion, Brazilian foreign trade authorities now expect it to reach $12 billion. This will allow Brazil to continue its relatively more relaxed import policy, which has benefited U.S. firms.

Last year Brazil announced broad import liberalization measures. These had a limied effect on the level of imports, primarily because the licensing system remained, and the "Law of Similars" remained in force. CACEX (the International Department of the Bank of Brazil) was allowed to retain its highly discretionary authority, based on whether or not a Brazilian-made "similar" exists. Towards the end of last year, in response to improved economic conditions and heightened demand for imported goods, CACEX relaxed somewhat its application of the Law of Similars. CACEX still accords highest priority in licensing decisions to those imports, e.g., coal, chemicals, electronic components and capital goods, required to produce Brazil's exports.

The government is further streamlining import procedures by decentralizing the administrative process (giving more authority to CACEX branch offices throughout Brazil) and reducing the number of items on the prohibited list. Product categories removed from the prohibited list, however, still require a CACEX license. Most of the items remaining on the prohibited list are consumer goods with a Brazilian-made similar, e.g., textiles, cosmetics and sporting goods, which are not likely to be importable under any circumstance.

While Brazil's recovery from deep economic recession continues, its place may be slowing from the very rapid pace of the last six months of 1984. The Brazilian government originally projected a 5 percent growth in GDP this year, somewhat higher than the 4.3 percent in 1984. Growth, however, will probably be in the 4-4.5 percent range--a notable achievement, given the depth of the earlier recession. Brazil's ability to sustain economic growth depends on policies now being formualted by the Sarney government. Price controls, for example, have dampened inflation slightly (down to an annualized 211 percent), but have also contributed to uncertainty in business planning. Brazil's successful negotiation of an agreement with the International Monetary Fund, which in turn affects Brazil's ability to manage its foreign debt, would also permit rolling-over of commercial credit lines that help finance Brazil's foreign trade.

Restrictive policies still appear to be the hallmark of Brazil's informatics sector. Last fall the previous government passed the national Informatics Law, which codified policies that reserve for Brazilian firms a large portion of the domestic market for computers and other products incorporating microprocessors. Implementing regulations are now being prepared. Until these are completed, it is not possible to determine whether the Sarney government is prepared to take a more liberal attitude on informatics.

U.S. companies interested in exploring the high-tech market in Brazil may choose from the following U.S. Department of Commerce trade promotion events scheduled in coming months: the Software USA Exhibition Sept. 29-Oct. 3, 1985 at the Informatica Fair in Sao Paulo; the Computer USA Solo Exhibition, June 16-19, 1986 at the U.S. Trade Center in Sao Paulo; and the Instrumentation II Solo Exhibition, Aug. 25-28, 1986, also at the U.S. Trade Center. Other events in our promotion schedule include a Security and Safety Equipment Trade Mission, Dec. 10-12, 1985, and a Technical Books and Publications Trade Mission, Sept. 3-10, 1986.

Additional commercial information on Brazil can be obtained from the Commerce Department Desk Officer on (202) 377-5427.

COPYRIGHT 1985 U.S. Government Printing Office
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