There is a very simple reason for Brazil’s interest in making investments in Central America: it can be used as an export platform for the US and European markets.
The government will formally inaugurate an investment incentive program for Central America and the Caribbean (Programa de Incentivo aos Investimentos Brasileiros na América Central e Caribe) (Pibac). at the Brazil-Central American Integration System summit in Guatemala on September 12 and 13, which will be attended by President Luiz Inácio Lula da Silva.
The Pibac is being rolled out against the backdrop of the recent trade treaties between the US and Central America/Caribbean, known as CAFTA. In January 2006, when CAFTA goes into effect, 99.8% of the region’s exports will have a zero import tariff for the US market.
“Brazil continues to be interested in the Americas Free Trade Agreement (FTAA), but while it is still in the pipeline, we will take advantage of CAFTA to achieve market access,” explains Mário Vilalva of the Foreign Ministry’s Commercial Promotion Department.
Meanwhile, in Brazil the Pibac will get to work educating the Brazilian export community on the advantages of internationalization.
“In the case of Central America, Brazil can be competitive in the area of capital goods. So, the idea is to invest in order to make capital goods there, and then export them,” explained Vilalva.