SANTOS, Brazil — For insight into why Brazil has fallen far short of becoming a global trading and economic power, look no further than the congested docks at its port of Santos, South America's largest and perhaps most inefficient shipping hub.
Until Thursday, when 11,000 union workers finally returned to work, trade had been paralyzed by a 15-day strike at the port 70 miles from Sao Paulo, South America's largest city. The result: a monumental backup of containers and bulk commodities such as soybeans, coffee and orange juice concentrate.
It's no isolated occurrence. Work stoppages are chronic here, as are customs delays and high dockage fees. Together, they make the average cost of moving freight through Santos twice what it is in competing South American ports. That prompts shippers to go through Buenos Aires or other hubs and adds to the "Brazil cost"--the extra expense and hassle of doing business in South America's biggest economy.
Resolution of the recent strike speaks volumes about the difficulties Brazil faces in breaking out of its once-closed economy, overcoming its mediocre trade status and achieving its often-touted potential as a emerging world economic power.
Port operators say that the strike settlement gives them "productivity gains" but that the unions still retain too much arbitrary control over work rules, adding unnecessarily to freight-handling costs and hurting the port's competitiveness.
The stakes are high in these skirmishes, not just for this resource-rich nation of 170 million, but for its neighbors, including the United States. They stand to gain from a stronger Brazilian economy and, by extension, a better market for their exports.
Economists point out that trade is one of several crucial contributors to any economy's growth. Trade makes an economy efficient and gives it access to the latest technology, said Richard Newfarmer, a World Bank economist. Poor trade levels hold an economy back by stunting domestic production and depriving it of foreign exchange, weakening a nation's own currency.
"When Brazil is growing more rapidly, it is buying more [from the United States]," said Albert Fishlow, senior economist at Violy, Byorum & Partners in New York and a specialist on Brazil. "Our exports' rate of growth to Brazil in the 1990s, when it was opening its economy, was among the most rapid that the U.S. enjoyed anywhere."
