After announcing a reduction in the balance of trade in 2019, the Brazilian Foreign Trade Secretary of the Ministry of Economy Lucas Ferraz stated that the federal government’s goal is not to increase this balance, but to expand the country’s total trade, which is the sum of imports with exports. Last year, that figure was US$401.34 billion – down 5.7 percent from a year earlier.
“Our objective variable would be to increase the so-called trade flow in the country over GDP. So, we are aiming to increase exports plus imports over the national GDP. Today, this number is around 24%, 23%, we know that in an international comparison this is far below what would be expected from the dimensions of the Brazilian economy, we are talking about the eighth economy in the world” said Ferraz.
In countries with a similar economy to Brazil, such as Mexico, the percentage of trade flow over GDP is over 70%. In China, it exceeds 40% and in Chile it reaches 30%. “We are well behind. The world average is higher for countries similar to Brazil,” added the secretary.
According to Ferraz, the government should not worry about obtaining very positive trade balances and cited the case of the United States, which has a trade deficit. “The central focus of the Jair Bolsonaro government’s trade agenda is not to obtain trade balances. Our fundamental objective is to increase the degree of integration of the Brazilian economy and thereby contribute to increase our productivity with long-term growth, This is our main goal. If trade balance were important, I always say that, the United States would be the worst-performing economy on the planet, because for decades it has had a trade deficit in its balance. Trade balance is the net result of how much a country saves and how much it invests,” he said.
Even with a worse result on the Brazilian trade balance last year, the Foreign Trade Secretary gave a positive balance on 2019. He cited the conclusion of important trade agreements, such as Mercosur’s with the European Union and the European Free Trade Association. (Efta, including Switzerland, Norway, Iceland and Liechtenstein).
“Basically we are talking about 25% of global GDP, 780 million consumers, an extremely important deal that took 20 years to negotiate and we were able to conclude by 2019. We concluded the Mercosur-Efta agreement, one of the most prosperous regions in the world, with [GDP] the size of Mexico,” he said.
Ferraz also mentioned the advanced stage of negotiations for a free trade agreement with Canada, South Korea and Singapore, which should be signed by 2020. He also cited the resumption of the automotive agreement with Mexico and the conclusion of similar agreements with Paraguay and Argentina.
Source: Agência Brasil
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