Brazil looks to India as trade with Argentina deteriorates

Brazilian President Jair Bolsonaro is set to visit India next week, aiming to boost trade with a rapidly growing market as ties with neighbouring Argentina deteriorate.

With the Asian nation expanding around seven percent a year over the past decade, Brazil sees a huge potential for its exports of food and commodities, according to Marcos Troyjo, the special secretary of foreign trade and international relations at the Economy Ministry.

“International experience shows us that people eat more and invest in infrastructure when their income doubles,” Troyjo said in an interview in Brasilia.

Brazil sees a chance to increase its US$7 billion in annual bilateral trade with India to US$25 billion in the next few years. With the South Asian giant doubling its per capita income in the last 10 years and set to overtake China in terms of population in the next decade, India represents a massive potential market for Brazil as it opens its economy to the world, Troyjo said.

Argentine rows

Brazil’s plans to deepen its relationship with India come as its ties with neighbouring Argentina deteriorate. 

While 2019 saw the two economies work together to push for a trade deal between the Mercosur customs union and the European Union, relations have soured since the election of Bolsonaro’s ideological opposite, Alberto Fernández. With both the new Argentine government and many lawmakers in the EU lukewarm about the agreement, its future is unclear.

“We are aiming for a greater integration of Brazil into the world economy,” Troyjo said. “What we are going to do with Mercosur is in line with this. But all the signs that we have seen in the last few weeks have been bad.”

Brazil would not tolerate any foot-dragging on the part of its Mercosur partners, he added. “We cannot allow, as in the past, to travel at the speed of a convoy, where everyone’s speed is determined by the speed of the slowest vehicle.”

Davos message

Before the trip to India, the economic team, including Troyjo and Economy Minister Paulo Guedes, will attend the World Economic Forum in Davos.

Their message to the potential investors at the Swiss resort will be that Brazil has managed to reform its pension system, in contrast to those countries that are still increasing their spending on old-age benefits.

Brazil is swimming against the tide, Troyjo said, that is the great difference between the country and the rest of the world.

“We have a huge stock of liquidity in the world and a lack of investment in infrastructure,” he said. “We want to tackle this great paradox.”

While Brazil is also looking to develop its relationship with China, this will not extend to the signing of a trade deal. Instead Brasilia wants to see the EU-Mercosur deal finalized in order to make the country more attractive for the Chinese.

Troyjo said that the signing of the first phase of a US-China agreement is a welcome development and should have a positive impact on Brazil. According to Troyjo, at this moment in time what the country needs most is a reduction in the level of global uncertainty in order to move ahead with economic reforms.

“It’s best to do this when the skies are blue than in the middle of a rainstorm,” he said.