Brazil should not choose partners for international trade – Foreign Trade Secretary

RIO DE JANEIRO, BRAZIL – The Ministry of Economy’s Foreign Trade Secretary Lucas Ferraz said that the Brazilian government is open to the world and “cannot choose partners for trade agreements,” favoring Western over Asian countries.

He advocated that Brazil should not concentrate efforts solely in opening negotiations with the United States and should remain attentive to opportunities in Asia, which he defined as “the most dynamic region in the world, with two regional mega-agreements” – the Transpacific Partnership (TPP), which comprises 11 Asian and American countries bordering the Pacific Ocean, and the RCEp Treaty, comprising 15 Asian and Oceania countries, including China.

Ferraz attended an online panel organized on Tuesday (6) by the Getulio Vargas Foundation (FGV).

As an example of this awareness within the Ministry of Economy, Ferraz reported that Brazil is about to start negotiations with Indonesia and Vietnam. There are also ongoing talks with Singapore and South Korea, he said.

“As one of the 10 or 12 world’s largest economies and with the homework done, we can’t just sit and wait, choosing a commercial partner and prioritizing all negotiation efforts to try to reach an agreement with the United States. It is clear that the United States is a highly important economy.”

“But if we look only to the West and ignore the most dynamic region in the world, which is Asia, we may lose out and fail to achieve such a favorable result,” said one of the main negotiators of the Brazilian government.

Ferraz recalled that Brazil has completed – albeit not yet signed – the free trade agreement with the European Union (EU), and an agreement with the European Free Trade Association (EFTA), in addition to active negotiations with Canada, Singapore and South Korea.

On the delay in signing the agreement with the EU, he minimized the environmental issue and stated again that, in fact, the agreement has not advanced due to a matter of political economy of European countries, such as France, that fear Brazilian agricultural competitiveness.

In addition to advocating more trade agreements with other countries, Ferraz stated that Brazil needs to strive to turn MERCOSUR into a true free trade area, integrating sectors such as the automotive industry into the Asunción treaty, and working to lower the Common External Tariff (TEC).

Furthermore, he said it is essential to “urgently implement” the Single Foreign Trade Portal program, in order to facilitate procedures and reduce import and export delays.

On another front, the government is trying to reduce the waiting line of requests for import licenses, which should have dropped by half in two and a half years of government, he added.

The secretary further criticized sectors claiming to be against openness. “The issue of international integration is for the productive sector. How are we going to export a product with only 10% in imported content when abroad we are competing with products that have 30% or 35% of imported content?

“How can we export a product if Brazil only has 15% of its total exports with preferential access, when the rest of the world has between 60% and 70%?”, Ferraz asked, saying that the productive sector continues to focus strongly on the domestic market rather than trying to compete in global markets.

About agreements with Asian countries, Ferraz minimized the logic that they are detrimental to the trade balance. “Many criticize, say that it is complicated with Asians because we only export commodities to import industrial goods. What I have been pointing out is that the trade agenda cannot be looked at from the retail perspective. You have to look at it globally,” he said.

“The network of agreements Brazil has negotiated or is negotiating will generate gains estimated at around R$1.7 trillion (US$327 million) for Brazilian GDP in 15 to 20 years,” he added.

In global terms, the world should experience a shortening of production chains that will result in greater security and speed to the supply of services, components and inputs, the secretary said. However, this reorganization will not imply the end of these chains, as some are suggesting.

This supposed shift of an entire production chain of certain types to a certain country “has only anecdotal and never empirical evidence,” Ferraz argued.

Source: Valor