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THOMAZ ZANOTTOHead Director
DEREXDepartment of Trade and Foreign Affairs
Brazil and the global value chains
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The Industry System
Accounts for 131 sector business associations which stands for about 150,000 regional and national firms
• 3rd largest economy in Latin America, after
Brazil and Mexico;
• 70% of Brazilian manufacturing GDP;
• 33% of Brazilian total GDP;
• 48% of domestic production of vehicles;
• 3rd largest aircraft producer in the world;
Source: Investe SP, IBGE, MDIC
The state of São Paulo
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DEREX | Department of Trade and Foreign Affairs
Bilateral trade and investment relations...
Source: Aliceweb; Central Bank of Brazil
• 5th largest single direct investor in
2013 (US$ 2.5 bn);
• 6th largest single holder of assets
in the country (US$ 31.3 bn in2012)
• 5th main destination of Brazilian
exports in 2013 (US$ 7.9 bn);
• 7th main source of Brazilian
imports in 2013 (US$ 7.1 bn);
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DEREX | Department of Trade and Foreign Affairs
Recently announced japanese investments in Brazil...
• US$ 500 mn in a
new automotive plantat Itirapina, state ofSão Paulo;
• US$ 50 mn in an
eolic energy park atthe state of RioGrande do Sul;
• US$ 500 mn in a
new motor plant atthe state of Goiás;
• US$ 10 mn in a
new plant for medicalinstruments at thestate of São Paulo;
Source: Valor Econômico, 15/08/2014
+ investments in insurance and banking services
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DEREX | Department of Trade and Foreign Affairs
Current Brazilian economic portrait
• 1970’s: industry development driven
by imports-substitution;
• Resulted in a diversified industrial
base, from steel to textiles;
• Difficulties in integrating logistics
within the country and the region;
• Custo Brasil: outdated tax system,
bureaucracy compliance, cost of
capital, labour legislation, etc;
Brazilian insertion in the global
value chains is a work in progress...
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DEREX | Department of Trade and Foreign Affairs
Relevant cases of Brazilian productive chains...
• Value added: each US$ 1.00Embraer exports, around US$0.70 were imported;
• Main upstream activities(project and development)done in Brazil;
• Globalized supply chain withhigh skilled services content;
• Government procurement in theE&P value chain;
• Opportunities for foreigninvestment in services ofengineering and management ofproduction (derivatives);
• Distribution synergy (e.g: gasoducts crossing industrial clusters);
Oil and Gas:
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DEREX | Department of Trade and Foreign AffairsDEREX | Department of Trade and Foreign Affairs
Regional opportunities for insertion in the value chains...
Brazilian automotivesector:
Trade with Argentina and Mexico goes either way in the
automotive value chain, accounting for:
• 15% of Brazilian imports of autoparts (US$ 1.9 bi);
• 72% of Brazilian exports of autovehicles (US$ 4.9 bi);
• 6 international agreementsrelated to the sector enhanced the productivechains with partners in theregion;
Source: ANFAVEA and Sindipecas
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DEREX | Department of Trade and Foreign Affairs
Proposals of integration
Deeper physical integration among the countries of
MERCOSUR and ALADI;
Technological cooperation with high developed
economies, like European Union, United States and
Japan;
Trade and investment agreements with strategic
partners to boost upgrading along the value chains;
Enforcement of trade facilitation initiatives among
Latin and African countries;Position paper of FIESP, launchedthis June;
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Thank you!
Thomaz ZanottoHead Director
55 (11) 3549 [email protected]
DEREX | Department of Trade and Foreign Affairs