Europe will not become the biggest trade partner of Brazil, the Arab League is and will be, after China.
While Bolsonaro is counting the days for his one year anniversary in power, it looks like he is becoming internationally more isolated, although it seems. While he’s establishing ties with Orban, he is betting on the old trade system of export of agricultural products to the Middle East and North Africa (MENA).
Brazil had a positive twenty billion on the trade balance in 2018 with the Arab League, and in 2019 it’s 15% up. Brazil has only a negative trade balance with Qatar for five billion, because it buys fertilizers in Qatar.
While the EU under the agreement would have according to a sources twenty billion more export to Brazil. According to the same source the current nine billion trade surplus for Brazil would go down, the export for the EU would grow more, because the Mercosur still will have some trade barriers.
Only a single country like China has a worser trade balance with Brazil, Brazil has a thirty four billion surplus.
Ideologically Bolsonaro is close to Orban, president of Hungaria, it seems that for his economical system he will stay close to the old system that Brazil has always had. While Tereza Cristina (minister of agriculture) went at the end of September to the MENA. Her president is now going to Saudi Arabia, Qatar and UAE from twenty five to thirty October.
Relations with US and Israel, where it began…
After gaining power, Bolsonaro went to Israel to show his sympathy with the state. Later on he went several times to the United States to show his sympathy for president Trump. Both were to show the Brazilian society that change was coming.
Rather then being applauded for his appeal, he received powerful opposition from the Arab League and this lead to clashes between the Muslim residents en Jewish residents of Brazil.
Although the new system with focus on the US and Israel, is also a viable for Brazilian export, currently has negative thirty billion trade balance with the US. Brazil and Israel could exchange agro-technology, because this sector is since the seventies mechanized in Brazil. The new technologies are mostly application and drone driven. And it’s clear that in certain sectors Brazil could become market leader in the US according a source. We see that it’s theoretical, the Arab League has a solid basis for trade with Brazil.
Arab league most important trade partner is Brazil
The Brazil is the major trade partner of the Arab League. Trade with the MENA is far more interesting then with Europe. This is because the MENA is fully dependent on a stable importer of agricultural products like Brazil, because it’s infertile soil. This is the old exporting system of Brazil.
On the other hand in September we saw the beginning of a new era of rapprochement with the Arab League, since the calling off the repositioning of the embassy to Jerusalem. This will now be an APEX (Brazilian chamber of commerce) in Jerusalem and is planned for November-December.
EU-Mercosur, a trade agreement that is not so easy to work out
End of May, came the closure of the Mercosur-EU trade agreement, it currently has a trade surplus, which would decline under the EU-Mercosur trade deal. The aggreement would boost for example the sale of ethanol-cars to Europe, although the NGO-sector in Europe has strong critiques about the extraction procedures of ethanol.
The problem is that the export of Brazilian meat and agricultural products will be a strong competition of Irish, French, Belgian and Polish agro-industries.
That’s why president Macron of France is putting pressure on Brazil for distroying the Amazon Rainforest, because they are expanding the agricultural space that leads to climate change, and made it a condition for succeeding of the trade agreement.
New business mission to Asia and the MENA
In China, who was the only one the congratulate Bolsonaro with his presidential win, there is also a lot of frustration that Bolsonaro is playing the card of the US and Israel, but according to academical sources Brazil will not benefit from the trade war with the US. Brazil has already a trade benefit of thirty billion dollars with China.
We can’t forget that the international business mission at the end of October is also leading to Asia, with a stop in China to reconfirm Brazil’s stable export to China, which can’t produce enough food for it’s inhabitants and exports finished products to Brazil.
Will Bolsonaro put his name on international trade?
The stakes are high with the MENA as main trade partner for Brazil, after China. A further rapprochement to populist governments in Europe, Israel and the US could lead to a stronger resentment of the MENA countries and China.