SAO PAULO, BRAZIL — U.S. trade with Brazil bounced back in 2000, suggesting that for American plastics companies at least, Brazil has recovered from its 1999 currency devaluation.
While some evidence suggests the sluggish U.S. economy will slow imports, the overall health of the Brazilian economy pushed U.S. plastics exports back up to levels seen before the monetary crisis two years ago.
The U.S. trade surplus in plastics hit $630 million in 2000, up from $500 million in 1999, and above $595 million in 1998, before Brazil's currency dropped 40 percent against the dollar and its economy went into a free fall.
Much of the surplus came from resins, which trade analysts said is expected. But molds and some types of manufactured plastic products, such as tubing and gaskets, also saw export booms, according to U.S. government data. The trade figures do not include industries where plastics supplies parts, such as autos or electronics.
Brazilian data tells a similar story: The United States exported $219 million worth of manufactured plastic products to Brazil in 2000, while importing only $52 million, according to the Brazilian Plastics Industry Association (Abiplast), in Sao Paulo. Abiplast represents the plastics processing industry.
Brazilian officials argue that the United States uses protectionist laws like anti-dumping statutes to keep some of Brazil's biggest exports, such as steel and orange juice, out of the United States.
But for plastics, Brazilian officials say the problem is internal.
Abiplast President Merheg Cachum said the chief reason Brazil has a plastics trade deficit is high taxes that make Brazilian companies less competitive.
"Here you have one big problem — a high level of taxation," Cachum said.
Cachum said he hopes the industry can erase that deficit and have a surplus with the United States by 2004.
Abiplast data shows Brazil runs a worldwide deficit in plastics: In American dollars, Brazil has a $370 million deficit in plastic products, a $710 million deficit in machines, a $100 million deficit in molds and a $90 million deficit in resins.
While Brazil continues to attract foreign capital to finance its growth, the country is increasingly concerned about that trade deficit, particularly in manufacturing, said Luciano Coutinho, a Sao Paulo economist who is frequently quoted in the local press.
"At some point, policies toward reversing that are bound to come into place," said Coutinho, who heads a consulting firm, LCA Consultores, in Sao Paulo. "The whole Brazilian elite business community is already convinced that the degree of external vulnerability is too high. ... It is the manufacturing sector that suffers from the very high vulnerability."
What remains to be decided is what medicine will be applied: protectionism, changes to improve Brazil's own competitiveness or some combination of both.
If Brazil had a better balance of payments, its economy could grow more, perhaps at 6 percent a year for the next decade, Coutinho said.
One sector that strongly felt the heat from Brazil's currency problems was machines, although many machinery and equipment suppliers interviewed at Brasilplast in Sao Paulo say 2001 is looking up.
U.S. machinery companies had a surplus of $31 million worth of plastics and rubber extruders, injection presses and blow molders, but that is down from $53 million in 1998, according to U.S. data.
A 1999 report from the U.S. government's office in Sao Paulo said Italy holds the largest market share, at 24 percent of imported machines, followed by Germany and the United States at 16 percent each.
Brazilian machinery makers sell very little into the United States.
Somewhat surprisingly, U.S. mold makers saw a big jump in exports. Brazilian tool shops, in spite of their cheaper currency, saw significant drops in their sales into the United States, according to U.S. data.
U.S. rubber and plastics moldmakers had a surplus of $13.4 million in 2000, more than four times the surplus in 1998.
"I'm surprised at that," said James Meinert, director of national and international marketing for Snider Mold Co. Inc. of Mequon, Wis., who had been on a fact-finding mission to Brazil for the Society of the Plastics Industry Inc. of Washington. "I'm having a heck of a time selling tooling."
He said the growth probably represents U.S. automakers buying tooling in North America and sending it south. Because a mold for a single bumper can run more than $1 million, $13 million in molds is not that many orders, he said.
Brazilian toolmakers, however, sold only about $1.3 million into the U.S. through November 2000, down from just more than $3 million in 1998.
Portugal's mold makers have seen significant drops in their exports to Brazil because of the country's currency crisis, according to Manuel Oliveira, secretary general of Portugal's mold-making trade group, Cefamol. He was interviewed at Brasilplast.
Before the Brazilian real devalued in 1999, Portugal exported about 5 percent of its molds to Brazil, but that dropped in half. Now, it is starting to recover, he said.
"The economy is more stable now," Oliveira said. "We think the economy will develop now."