Foreign Trade minister comments on rapprochement with US

The new Minister of Development, Industry, and Foreign Trade, Armando Monteiro Neto, is betting on reviving Brazil's commercial relations with the United States and agreements with Pacific countries including Mexico, Peru, Colombia, and Chile as a hope for Brazil to enter new markets, faced with difficulties within Mercosur (Argentina, Brazil, Paraguay, Uruguay, and Venezuela).

“Governments need to respond to changing demands and circumstances accordingly. The time now is for us to adjust our focus and strategy and pursue other trade flows such as that of the Pacific countries, and also revive our relations with the US as they recover economically and are regaining a more prominent role in international trade,” he said.

Following a handover ceremony where he took office Wednesday (Jan 7), Monteiro told journalists that Mercosur is an important part of Brazil's foreign trade, but pointed out the regional bloc is facing difficulties due to the poor alignment between the economic policies of the bloc's countries. “Mercosur is a complex construction in that it has internal imbalances. Strengthening a customs union [an area where goods can circulate freely] amid diverse economic policies without any alignment is a challenge.”

But despite those difficulties, the minister said resuming the discussions towards a Mercosur agreement with the European Union is an important step to boost Brazilian exports. “The Mercosur countries have agreed some common ground to submit a proposal to the European Union,” he said. The next round of negotiations is in March.

Without committing to any specific export goals, Monteiro was optimistic about Brazil's exports in 2015. In his opinion, the falling commodity prices (agricultural and mineral commodities traded at international prices) should be offset by larger exported quantities. “Crop yields are going to improve, so the exported volumes are likely to grow and counteract the loss of revenue caused by the price trends.”

In his opinion, other factors that should help revive exports are the US economic recovery and resumed activities in oil platforms that had been shutdown for maintenance in recent years. He expects the petroleum deficit – oil exports smaller than oil imports – should continue to decrease in 2015, after reaching $16 billion in 2014.

Also according to Monteiro, higher dollar prices will be another boost on exports in 2015. “The exchange rates will be a key factor – not the nominal exchange rates, but the real rates [the price of foreign goods in the domestic currency divided by the price of domestic goods],” he said. But he gave no indications as to the ideal exchange rate for Brazilian exports.

Translated by Mayra Borges