Brasileiros no Canadá

O jornal eletrônico da comunidade brasileira no Canadá

Primeiro-ministro do Canadá vai ao Brasil

Posted by José Francisco V. Schuster em 05/08/2011

Preparing for a summer Brazilian samba -Published by Jenna Biegun on June 22, 2011

Get ready for Canada to start dancing the samba this summer.

After years of both sides tentatively feeling each other out, the coming months are expected to see an explosion of high-levelexchanges between Canada and Brazil.

It all starts with Trade Minister Ed Fast leading a Canadian business delegation to Brazil next week. There he will lay the groundwork for a highly anticipated trip to the country by Prime Minister Stephen Harper later this summer.

Mr. Fast’s visit also comes on the heels of a telling document out of the Foreign Affairs department that places renewed emphasis on the South American giant.

The June 13 Report on Plans and Priorities says Brazil will become a “priority focus” in Canada’s new leaner, “more tightly focused” commerce strategy. It also calls for the creation of new bilateral groups.

The planned visits by Mr. Fast and Mr. Harper, the new trade emphasis and the new groups collectively indicate that Canada is preparing to make a major push toward engaging Brazil.


It also represents a much-needed effort to inject new political momentum into a relationship that continues to face major business obstacles, say trade groups and academics.

While Canadian businesses are clamouring to get into Brazil, the country has high tariffs and a complex tax system, they say, which has deterred greater Canadian involvement thus far.

Brazilian firms are also not seeing Canada on the radar as much as they are seeing other markets, argues one prominent Brazil-Canada expert. As well, both Canada and Brazil have restrictive agricultural policies, while Brazil belongs to a regional trade bloc that limits its ability to negotiate bilaterally.

Infrastructure boom

Mr. Fast’s office confirmed he would be starting his trip on June 26. His specific job will be to help prepare the constitution of a new Canada-Brazil forum that will involve high-level government officials and CEOs of major corporations, said Brazilian Ambassador Piragibe dos Santos Tarragô. That forum will be formally installed when Mr. Harper visits Brazil.

Mr. Fast will also be visiting the capital of Brasilia, as well as São Paulo, seeking out ways Canadian companies can benefit from the exploding Brazilian infrastructure industry.

Canadian businesses are salivating over the prospect of sharing in Brazil’s red-hot infrastructure sector’s growth of seven per cent a year. Export Development Canada vice-president Todd Winterhalt told the Senate Foreign Affairs committee in December that such a growth rate translates into over half-a-trillion dollars in planned spending through the next few years—and that doesn’t include the 2014 World Cup and 2016 Summer Olympics, both being held in Brazil.

The sector’s growth highlights the benefits of any trade deal between Brazil and Canada. The country has the world’s fifth-largest population and the eighth-largest economy, and is projected to become the fifth-largest economy in a matter of years.

Canadian direct investment in Brazil has also jumped more than 70 per cent since 2000, to end at over $11 billion at the end of 2009. And Braziian investment in Canada is even larger at $15 billion. Both countries have now made each other’s top-10 investors’ list.

“We have a lot of complimentarity in terms of our sectors, and as it’s a country that’s rapidly growing, you have a lot of [Canadian] companies that are interested in that market,” said Jean-Michel Laurin, vice-president of global business policy at Canadian Manufacturers and Exporters, which has been pushing the government to liberalize trade with Brazil.

Yet while Canadian exports to the country rose by 67 per cent last year, and now total $2.4 billion per year, that is still less than one per cent of Canada’s exports overall.

At the same time, existing exports themselves are not as diversified as with other markets. Two-thirds are fertilizers, jet engines, turbines, pharmaceuticals and paper products. This leaves out a long list of classically Canadian sectors: Automotive, mining, forestry, farm and energy equipment, engineering services and aerospace, according to Mr. Laurin.

The CME says Brazil continues to apply high import tariffs, sometimes up to 35 per cent. As well, Brazil’s tax system and customs are very complex, he says. As a result, some of CME’s members have tended to set up shop in Brazil to try and sell into that market from within.

But for other firms without the capacity to expand their footprint internationally, or unwilling to front the cash to do so, that option is not feasible. Many CME members do not even bother looking at the country, he said, because barriers are too high.

Another issue is Brazil’s commitment to the four-country customs union of Argentina, Brazil, Paraguay and Uruguay, called Mercosur. The trade bloc’s charter says members can’t negotiate bilateral agreements with third parties.

Brazil is therefore hindered by its requirement to bring other governments on board. For example, Argentina faces presidential and parliamentary elections on Oct. 23, and the government is wary of signing on to major economic policy shifts ahead of the vote, according to a Reuters story.

Mercosur members also have been known to object to certain agricultural policies, a problem for Canada due to successive governments’ steadfast support for supply management of dairy and poultry, which limits imports of these products.

Still off the radar

Canada is not alone in trying to get into Brazil. In fact, Mr. Harper’s trip later this year will take place months after a March 19 visit by US President Barack Obama to Brasilia, where he met with President Dilma Rousseff. There, they signed a “trade and economic co-operation agreement,” which established a commission that will move to eliminate non-tariff barriers. US officials said at the time the agreement was one of the first steps to an FTA.

Brazil is also looking at FTAs with several other nations and trade groups, including Mexico and CARICOM.

WT Hewitt, vice-president of research and international relations at the University of Western Ontario and managing director of the Canadian Journal of Latin American and Caribbean Studies, warned the Senate committee in March 2011 that “Brazil has little inherent interest in Canada.”

“Their focus is much more on the United States, on the EU, on its own neighbourhood in Mercosur, on Africa increasingly, and more recently Asia. The fact that we may be now interested in Brazil does not mean that they will naturally reciprocate. This is a commonmisconception,” said Mr. Hewitt, who was behind a June 14 investment deal signed between the São Paulo Research Foundation, the University of Toronto and the University of Western Ontario.

But Brazil’s ambassador, Mr. Tarragô, rejected these arguments, saying he did not see serious problems in the relationship. He said Canada and Brazil can work out any trade differences in the Joint Economic and Trade Commission.

Mr. Fast’s visit, he said, should be seen as “more of a promotional visit” to discuss items like visa requirements, the facilitation of bilateral business trips, the exchange ofstudents and researchers.

Canada has failed to talk its way into a trade deal with Mercosur for over a decade. In 1998, Canada first signed an agreement with Mercosur which culminated in two rounds of exploratory talks in 2005 beforeCanada backed off during the third round that October. It took until 2010 for exploratory talks to again break the surface with an exchange of high-levelvisits.

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