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Secretary Daniel Godinho highlights Brazil’s recent trade policy successes.

Brazil currently finds itself in the midst of a deep economic and political plight, but that is not the only story. The economic downfall in the country has also meant better global trade results and a new strength to Brazilian exports, injecting new life into the private sector. On June 28, the Atlantic Council’s Adrienne Arsht Latin America Center invited Daniel Godinho, Secretary of Foreign Trade, and Marcelo Maia, Secretary of Commerce and Services, as well as prominent business leaders, to discuss these successes as well as what we can expect from the Brazilian economy going forward. The event also marked the launch of the Center’s #WhyBrazilNow series, an initiative to highlight emerging opportunities in a country in the midst of transformation.

Following introductory remarks by the Center’s director, Peter Schechter, Secretary Godinho focused his remarks on the current economic shift the country is enduring. He recalled that Brazil’s strategy towards development has historically focused on the domestic market and neglected an international lens. Nevertheless, there is a consensus that the country needs to incorporate foreign trade into its strategy going forward, Secretary Godinho argued.

“We are the ninth largest economy in the world, but only account for 1.2% of international trade”, Godinho lamented. He highlighted that Brazil is getting closer to the Pacific Alliance countries, has signed several trade agreements, and is currently celebrating the tenth anniversary of bilateral relations with the US. “I am glad to say that trade facilitation is now a state policy in Brazil”, Godinho added.

Addressing concerns about whether Brazil’s recent trade successes are due to currency depreciation, Godinho argued that Brazil is experiencing the positive impact of investments made during the commodities boom years ago. While there is no silver bullet to get Brazil out of its crisis, Godinho asserted that “trade liberalization will push forward other reforms”.

Secretary Maia highlighted the importance of the service sector for the Brazilian economy, noting that it accounts for 70% of value added in Brazilian GDP and 66% of formal employment. He celebrated the fact that the US is Brazil’s main trading partner in services, but nevertheless added that Brazilian companies need to improve their competitiveness and insert themselves into global chains. “We believe in the service and commerce sectors”, Maia asserted. When asked how these sectors can increase their exports, Maia highlighted that Brazilian companies are now realizing the importance of entering global supply chains and have begun to develop strategies to become competitive in the international market.

The discussion was moderated by Jason Marczak, director of the Latin American Growth Initiative at the Center. Michael Sheridan, Ford Company’s Director of Global Trade Strategy & Policy, shared a valuable private sector perspective on Brazil. Sheridan noted that Ford has been doing business in Brazil for nearly a century and currently employs over 11,000 people in the country. He lamented that there has been a decline in domestic demand and argued that the current crisis in Brazil is an opportunity to reshape its trade model and insert itself into the global supply chain. This is the time to “create a business model working with government to build in Brazil for the world”, Sheridan assured.

Silvia Menicucci, Foreign Trade Representative at the Brazilian Confederation of Industries (CNI) and also a panelist, mentioned that the guild shares the federal government’s vision that foreign trade is fundamental to the country’s development. “We support the measures related to trade facilitation approved by the Brazilian government”, Menicucci added.

Discussing Brazil’s outward-looking model in an international context, Godinho lamented the recent decision by the United Kingdom to leave the European Union, adding that the Mercosur-EU negotiations lost an important ally. Nevertheless, he trusts the European Commission to continue pushing ahead with the deal. Menicucci added that Brazilian companies are looking at Mercosur more than ever, and argued that “it is time to modernize” the trade bloc and make some of its rules more flexible.

In terms of competitiveness, Godinho discussed the challenges Brazilian companies face when attempting to export and import, arguing that there are currently too many government agencies involved in the process. Echoing this sentiment, Menicucci noted that companies ranked logistics as the main barrier to exports and imports in a recent survey promoted by CNI.