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Portugal Composition and Direction of Trade
Portugal's rising share of manufactured goods in total
merchandise exports, which reached 80 percent in 1989, was
indicative of the country's newly industrialized status.
Between
1980 and 1988, exports of manufactured goods increased by
10
percent per year by volume, which was double the rate of
its
European neighbors, and Portugal gained market share. The
country's major commodity exports in 1990 included
textiles,
clothing, and footwear (accounting for 37 percent of total
export
value); machinery and transport equipment (20 percent);
forest
products (10 percent, including pulp and paper and cork
products); agricultural products (8 percent, mainly wine
and
tomato paste); chemicals and plastic products (5 percent);
and
energy products (about 4 percent). Portugal's comparative
advantage appeared to lie with high forestry resources
content
(wood and cork products, including pulp and paper) and
labor-intensive products (textiles, clothing, and
footwear). With
the participation of multinational firms, Portugal was
also
gaining competitive strength in the export of automobiles
and
automotive components and electrical and electronic
machinery.
When compared with the other EC member countries and
the
United States, Portugal had a strong competitive advantage
because of its low wage scale. As an example, 1989 hourly
labor
costs in Portuguese manufacturing (in United States
dollars)
averaged approximately half those of Greece (a country
with a
similar per capita GDP), a third those of Spain, and about
a
fifth of most other West European countries and the United
States.
Manufactured goods (notably machinery, transportation
equipment, and chemicals) accounted for about 75 percent
of
merchandise imports in 1989, food and beverages for about
10
percent, and raw materials (mainly crude petroleum) for
about 16
percent. Portugal imported about 60 million barrels of oil
yearly
during the late 1980s, but the share of crude petroleum
varied
between 8 and 20 percent of total imports depending on
fluctuations in world oil prices.
Portugal's commodity trade was increasingly dominated
by the
EC (see
table 9, Appendix). In 1990 the EC member
countries
purchased nearly 74 percent of Portugal's exports and
supplied
over 69 percent of its imports; in 1985, the year prior to
Portugal's membership in the EC, the EC member counties
purchased
about 63 percent of Portugal's exports and supplied nearly
46
percent of Portugal's imports. Within the EC, the former
West
Germany, France, and Britain were Portugal's leading
trading
partners. But after the accession of both Iberian
countries to
the EC in 1986 (and the dismantling of trade restrictions
between
them), Spain suddenly emerged as a significant trading
partner,
taking over 13 percent of Portugal's exports in 1990 and
providing 14.4 percent of the latter's imports. Thus,
Spain
ranked with West Germany as Portugal's premier national
supplier
in 1990, ahead of France, Britain, and Italy.
The relative position of the United States in
Portugal's
import trade declined sharply from nearly 10 percent of
the total
in 1985 to 3.9 percent in 1990. Because Portugal heavily
imported
grain, soybeans, and animal feedstuffs, its adoption of
the CAP
led to costly trade diversion from former, more efficient
sources, mainly the United States, to higher-cost
continental EC
member countries. On the other hand, Portugal's full
membership
in the EC would permit its manufacturers to capture a
larger
share of exports to EC member countries at the expense of
lower-cost exporters from Latin America and East Asia;
similarly,
Portuguese producers of quality wine were expected to gain
market
share at the expense of wine producers in Southern
Mediterranean
countries that were not fully integrated into the EC. In
both
these cases, trade diversion would favor Portuguese
entrepreneurs.
Portugal's trade with the previous Escudo Area (its
former
African colonies) had fallen sharply since the revolution.
Still,
a restructured Angola under a competent, non-Marxist
regime could
once more offer Portugal significant opportunities for
two-way
trade in the late 1990s. The share of Portuguese imports
supplied
by the Organization of the Petroleum Exporting Countries
(OPEC),
which amounted to over 17 percent in 1985 (the year before
the
collapse of world oil prices), shrank to below 7 percent
in 1990.
Data as of January 1993
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