For Lula, Quest of New Markets Made Brazil Less Dependent on the US

zzz Conquering new markets, which constitutes the core of the Brazilian government's foreign trade policy, is one of the reasons for the country's growing exports. The assessment was made by president Luiz Inácio Lula da Silva during a recent interview, in which he evaluated the country's participation in the international market.

Lula ascribed the expansion of the country's market share in the last five years to maintenance of traditional partners and greater penetration of Brazilian products in new markets. Among these, the president highlighted the Arab countries, which are already the fifth largest trade partner of Brazil.

"The quest for new markets is one of the key contributing factors to the strong expansion of Brazilian foreign trade in recent years," says the president.

According to him, in addition to increasing its trade partners, Brazil has become much less dependent on so-called traditional markets – the developed countries. To the president, this was an event of strategic importance, as it prevented Brazil from suffering greater impact with the current slowdown of the United States economy. Brazil is not "strongly dependent" on the United States' market right now.

Lula also stated that in addition to expanding its export markets, the country has added value to its export basket with developing nations, including the Arab countries. The president underscored the fact that Arab nations are vital partners for Brazil and its foreign trade policy. As an example, he mentioned growth of Brazilian exports to that region of the world during the last five years.

In 2003, when Lula traveled to five Arab countries, exports from Brazil to the 22 Arab nations stood at US$ 2.5 billion. The figure increased to US$ 7 billion in 2007, representing growth of 180 % during the five-year period. Within that time span, expansion of sales to Arab countries was greater than that of Brazilian exports as a whole.

This year, according to projections made by exporters, Brazilian sales to Arab nations should reach US$ 7.7 billion. "I have no doubt that, in keeping with the expansion of South-South relations, bilateral trade will continue to grow, for the benefit of the integration of our economies," said Lula.

The Brazilian president also underscored the contribution of the Arab Brazilian Chamber of Commerce to the growth of trade relations between Brazil and the countries in the League of Arab States.

"The Arab Brazilian Chamber of Commerce is an institution of utmost importance to our relations with the region, as it provides a reference for commercial and cultural cooperation. It is also a partner with the government in providing support to activities that promote closer ties between Brazil and Arab nations," he asserted.

Below the main stretches of the interview:

Mr. President, your government's foreign trade policy is leading to the expansion of Brazilian exports. While maintaining its traditional partners, Brazil has also sought new markets, among them the Arab countries. To what extent has this contributed to the growth of foreign sales? What are the results of what you describe as the "traveling salesman presidential style"?

The quest for new markets ranks among the key factors that contributed to the strong expansion of Brazilian trade in recent years. It is a tool for diversification in two aspects. First off, we have diversified our trade partners, so that we no longer depend on a few partners, especially those in the developed world, as we did in the past.

This is of strategic importance, as it enabled us to avoid suffering greater impact from the ongoing slowdown in the United States economy, as we are no longer strongly dependent on their market. Secondly, we have diversified our exports, so much so that industrialized products are a highlight of our export basket with the developing countries, including those in the Arab world. I have no doubt that, in keeping with the expansion of South-South relations, bilateral trade will continue to grow, for the benefit of the integration of our economies.

In 2003, you traveled to several Arab countries. You were the first Brazilian president ever to visit that region of the world. Before you, there was only Dom Pedro II (the last Emperor of Brazil, in the 19th century). After your trip, there was an expansion of trade between Brazil and the Arab nations. What is your assessment of trade relations between Brazil and the Arabs?

I traveled to five Arab countries during the first year of my term (Syria, Lebanon, United Arab Emirates, Egypt, and Libya). As of then, our foreign sales to the region stood at US$ 2.5 billion. Further on, in 2005, we held the First Summit of South American and Arab Countries in Brasí­lia (capital of Brazil).

In commercial terms, the results of our closer relations are clear to see: we exported the equivalent to US$ 7 billion to the Arabs last year. Expansion of trade has benefited both sides, as we imported a similar amount from the region in 2007. In addition to foodstuffs, we are exporting high value-added manufactured goods, such as vehicles and aircraft, to those countries. This provides quality and strategic value to our trade partnership with the Arab countries.

Is it not time for Brazil to seek Arab investment in its domestic production chain?

We need to seize the numerous trade and investment opportunities that exist in the Arab world, same as we sought to attract Arab investment into Brazil. Minister Celso Amorim (Foreign Relations) visited many countries in the region. We are working hard to divulge investment opportunities in a wide range of sectors of our economy, as well as to promote contact between the entrepreneurial communities in our countries, by having the governments of several Brazilian states promote trade missions. The recent creation of direct flights between Brazil and the region will certainly constitute a powerful incentive for intensifying business contacts and exploring business opportunities.

Are you going to travel to the Arab world again? What would lead you to decide to travel to the region once again?

I intend to return to the Arab world as soon as possible. The motivation for me to proceed with these efforts at strengthening ties is the enthusiasm that the policy generates amidst the community of approximately 10 million Arabs and descendants living in Brazil. In addition to consolidating its progress in the commercial area, Brazil is determined to make a more significant contribution to peace negotiations in the region.

The recent invitation for Brazil to participate in the Annapolis Peace Conference, in the United States, is proof that the country is increasingly regarded as a relevant interlocutor in the region. Thus, we believe that we are contributing to strengthen a dialogue aimed at building a more peaceful, prosperous and fair world.

In your opinion, what is the importance of the Arab Brazilian Chamber of Commerce for trade relations between Arabs and Brazilians? Was the main driving force in expansion of trade with the Arabs government action, or was it the private sector's?

The Arab Brazilian Chamber of Commerce is an institution of utmost importance to our relations with the region. It provides a reference point in commercial and cultural cooperation, and is a partner with the government in providing support to activities that promote closer ties between Brazil and the Arab nations.

Our government favors joint action with the private sector, because we believe our efforts to be complementary. If, on the one hand, government action can pave the way for the private sector, on the other hand, dialogue between government and businessmen enables us to better set our priorities in terms of strategy.

We have noticed that businessmen, in turn, are paying attention to the signals given by the government with regard to foreign policy, and that they are willing to explore governmental initiatives, thus giving concrete meaning to the governments' intentions of promoting stronger trade ties.

When you placed stronger ties with Arab countries among your foreign policy strategies, what did you have in mind?

The initiatives that we take are a display of our confidence in dialogue as a tool for bringing together countries that are distant and have distinct cultures, but share a similar perception of the challenges facing developing countries in the contemporary world. Those initiatives, as I said before, are met with great enthusiasm by the Arab descendant community living in Brazil. We must show appreciation for this human capital, so that we can inaugurate a new chapter in our relations.

We have common aspirations, so let us dialogue and join forces. We want to form partnerships based not only in the complementarity of our economies, but also in the convergence of our political positions. In addition to strengthening South-South cooperation, our dialogue with the Arab world consolidates our trend toward multipolarity, as a result of the diversification of regional hubs.

What role do you think Brazil can play in solving conflicts in the Middle East, especially in Palestine?

We are able to help because we have credibility and impartiality. Brazil is an example of peaceful coexistence between Arabs and Jews. We have always championed peaceful solutions to conflicts. Our equidistance and aptitude for promoting dialogue allow us to play an increasingly active role in the Israeli-Palestinian peace process. We support the creation of an independent Palestinian State and are becoming closer and closer with the Arab world, and at the same time we sustain excellent relations with Israel.

For those reasons – as I have stated before -, we were one of a few developing countries, outside of the Arab group, that were invited to the Annapolis Peace Conference and the Paris Donors Conference, held in late 2007. The Brazilian contribution also includes technical cooperation for the development and reconstruction of the Palestinian Territories.

The second edition of the Summit of South American and Arab Countries (ASPA) is scheduled for 2009. What issues do you think should be discussed by the heads of state and of government during the meeting?

Even though we have progressed since the first ASPA Summit, there are some areas that we can focus our efforts in, such as scientific research, development of specialized services (automated banking and engineering, for instance) and investment in infrastructure. The Arab world, especially the Arabian Gulf region, is currently a huge construction site. We have broad experience in all of those areas, but the relation we want to build is a two-way street.

There is a broad scope of investment opportunities for Arabs in Brazil and South America. We also believe that there is potential to be tapped in the fields of tourism, culture, and environment, especially in the fight against desertification.

The second ASPA Summit, which should be held in the first quarter next year in Doha, will be another opportunity to enhance political dialogue, diversify the areas of cooperation, and reiterate the priority that we ascribe to the conclusion of a Free Trade Agreement between the Mercosur and the Gulf Cooperation Council (GCC).

Do you believe that the first edition of the Summit brought South American and Arab countries closer together? Were the actions agreed upon effectively implemented? Is the follow-up to the Summit occurring as expected?

Yes, definitely. In the last three years, after the first ASPA Summit was held in Brasí­lia, more than 20 high-level meetings have taken place as follow-ups to the decisions made in the scientific, economic, cultural and environmental areas. In the most recent chancellors meeting, held in Buenos Aires last February, there was an unequivocal display of interest from all countries in promoting the second ASPA Summit, in Doha.

Have trade relations between Arabs and South Americans progressed? In which way?

In the economic-commercial realm, Arabs and South Americans became much closer with the ASPA. Trade between the 34 ASPA member countries is growing continually, having reached US$ 20 billion in 2007. The potential is huge. In the first quarter of this year alone, our exports to the region grew 43%. The flow of trade should increase even further after the conclusion of the Free Trade Agreement, to which I have already referred. Arab countries rank among the leading buyers of Brazilian chicken meat, footwear, equipment, fruit, and cosmetics, among other items.

In 2007, in the field of tourism, Brazil sent missions to Qatar, Kuwait and United Arab Emirates in order to promote national destinations. By the end of the year, passenger flow had grown a lot, resulting in the aforementioned creation of a direct flight between São Paulo and Dubai, which is now going to be extended to Buenos Aires, as well as other routes South America.

Mr. President, from what you have said, relations between Arabs and Brazilians are not limited to trade between the two regions.

The strengthening of ties between nations must not be assessed solely from the angle of concrete and immediate results, but rather as a gradual process of coming together, taking into account historical affinities, common interests and the potential for them to be achieved.

One such example is the cultural agenda organized by the ASPA, which helps bring our peoples together. Other examples include the exhibition "Amrik – Arab Presence in South America," which toured the Arab world; the ASPA Library, an institution already operating in the University of São Paulo, and which should have its own building in Algeria; the Institute for Studies and Research on South America, to be established in Morocco; and the publishing of the first trilingual Portuguese-Spanish-Arabic book, about the trip of an Arab Imam to Brazil in the mid-19th century.

In broad terms, what is the importance of the ASPA?

The ASPA is an outstanding example of the fact that our international actions are ultimately based on the same ethical, humanitarian and social justice principles that provide the foundation for the policies that we are implementing in the domestic realm. Its creation takes place within the context of a new international mapping process, in which relations are no longer determined by the large Northern powers, and are gaining new dimension as Southern countries establish direct relations among themselves. The diversification of relations provides stability and safety to Brazil and the other countries involved.

Does civil society have a role to play in this movement of coming closer together with the Arab countries?

All of these actions have brought us closer and, in some cases, they have prompted civil society itself to take control of the process. Such is the case with the Arab Brazilian Chamber of Commerce, in São Paulo (SE Brazil), which offers training in foreign trade to Arab students and technicians, so as to facilitate bi-regional exchange.

Since 2005, the Mercosur has been negotiating a free trade agreement with the Gulf Cooperation Council (GCC), a bloc comprised of Saudi Arabia, Bahrain, Qatar, United Arab Emirates, Kuwait and Oman. In the beginning, it was assumed that the treaty would be easy to negotiate, as Gulf economies supposedly do not compete against the Southern Cone economies. However, almost three years have passed and the agreement has not been signed yet. It seems to be meeting resistance from the Brazilian petrochemical industry, which is afraid of competing with the strong GCC industry. How to move forward with this agreement, if the Mercosur is afraid of opening up its market to one of the few sectors in which Arabs are truly competitive? Is there a forecast of when the treaty might be inked and what its content will be?

The free trade agreement under negotiation with the GCC is regarded by Brazil as a crucial step in the broader strategy for strengthening economic-commercial ties between Mercosur and the Arab world, especially the Gulf States, due to the potential that they have for trade, not only of goods, but of services and investment as well. Our bloc is also negotiating with Morocco and Jordan.

In these rounds of commercial negotiation, we seek to explore formulas that contemplate the interests of GCC countries, at the same time protecting activities that are vital for the development of the Mercosur nations. By moving in that direction, we are going to try and strike a balance between the export interests of GCC countries and the interests of the Brazilian petrochemical industry.

During a recent trip to Saudi Arabia, minister Celso Amorim stated once again that Brazil ascribes high priority to negotiations with the GCC, and that the country desires to work together with its Mercosur partners to find viable solutions to the natural problems that arise during the negotiation process. As for the deadline, the last details could be worked out in another two or three rounds, but it is too early to make any predictions regarding time. As far as Brazil is concerned, we wish to conclude the deal as soon as possible, because it will provide new dimension and dynamism to our inter-regional relations.

Anba –


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