Dias Reis : l’UE, un partenaire pour les entreprises brésiliennes[en] 

How has the Brazilian economy been hit by the crisis? 

The Brazilian economy has some specific conditions which protect the country against some of the problems European and American economies are facing. Of course jobs were lost and corporate profits did fall, but the effects here are not so strong. 

Some of the reasons for this are: 

1) Brazilian banks are very healthy due to a long period of high profits and zero exposure to toxic assets. Brazilian legislation restricts this kind of international exposure. 

2) In the last few years, national purchasing power has gone up, due to both the expansion of the economy but also due to social policies, which have enabled millions of poor inhabitants to improve their quality of life: meaning that some of these people have finally been included in the market as effective consumers. 

3) The Brazilian economy has become much more modern on the last few years, and a reasonable number of local companies are now more competitive. 

4) Brazilian international reserves in dollars and other relevant currencies are very comfortable (more than US$ 200 billion) and the country is more protected in this crisis than it used to be in previous economic turbulence, like in the 1990s. 

5) Some Brazilian companies have become global in the last few years (e.g. oil firm Petrobras; beer giant AmBev; airplane company Embraer; steel firm Gerdau; bus company Marcopolo; construction firms Camargo, Correa and Odebrecht; and mining firm Vale), which means they will contribute to inserting Brazil in a more relevant way into the international economic arena whenever global economy recovers. 

Plus Brazil is self-sufficient in terms of oil and is the global leader on ethanol, the most important alternative fuel for being environmentally correct. 

How have Brazilian companies been trading with Europe so far, and how this has changed? 

Europe is being increasingly seen as a relevant market for Brazilian companies - not only as a market to receive Brazilian goods, but also as a region from which new investments can be attracted. 

There are a high number of European companies which have heavily increased their investments in the country in the last ten years (such as Telefonica and Santander from Spain; Portugal Telecom from Portugal; Mercedes-Benz and Volkswagen from Germany; Telecom Italia and Fiat from Italy; Volvo from Sweden; HSBC from the UK; Renault, Peugeot, Carrefour and Casino from France). 

Some Brazilian industries complain about EU policies which limit Brazilian exports to Europe (such as meat), but the continent is seeing as relevant and reliable partner for trading. The Brazilian currency is now over-evaluated vis-à-vis the dollar and (to a lower level) the euro. This makes Brazilian goods less competitive for export. 

Can you tell us more about the liberalisation process since the 1990s? 

During the 1990s, Brazil faced a consistent process of privatisation. After decades of governmental control, telecoms (100%), steel (100%) and energy (over 60%) companies and many regional banks were sold to Brazilian and international private companies. 

This fact, plus a process of opening the Brazilian market to international commerce - import taxes were strongly reduced - produced a tremendous change in the way companies look for competitiveness and new strategies. 

As mentioned before, now the country itself and Brazilian companies are in a better position to look for a more relevant role on the global arena whenever the economy goes up again. This will be a 'second wave'. 

Is there a need for Brazilian firms to become competitive internationally? 

This process has already happened to some companies, as mentioned above. Anyway, it is possible to predict that new local companies will become more international, mainly towards other Latin American countries. 

One of the advantages is that lots of Brazilian companies and local subsidiaries of global companies have invested a lot of money in remodeling facilities and buying new equipment and machinery in the last few years, thus becoming more competitive and prepared to fight consistently for more relevant market shares, in different markets. 

The main problem to achieve this goal is the overvaluation of the 'real', the Brazilian currency. 

How have Brazilian companies been dealing with EU relations so far?

As I said, first of all, Brazilian companies from a variety of sectors consider Europe as a more and more relevant player. This is valid in both situations: Europe as a market to buy Brazilian goods and as a region from which new investments can be attracted. 

On the other hand, many Brazilian companies are still learning about European complexity (different types of clients, different types of consumers, etc.) and the rules which govern the European trade system. 

Only a limited number of entrepreneurs and executives really know the role of the European Parliament and the European Commission, for example, and the impact of their decisions in terms of business. 

Some Brazilian industries complain about EU policies which, according to them, limit Brazilian exports to Europe (meat products are a good example). 

They claim there is a high level of protectionism in business relations between Brazil and the EU. There is a perception, among a significant number of Brazilian businessmen and journalists, that EU could be more flexible in terms of ongoing bilateral trade negotiations. 

What was the role of the state in this? How have government policies evolved?

The Brazilian government has very good relations with almost all European countries, but this should not impede our diplomats from defending the idea of an EU that is more flexible towards Brazilian exports. 

Has there been a turning point recently? Or is it a slow evolution? What in your view caused this?

It is a slow evolution. And it must be said that Brazil's move to insert itself in a more strategic way onto the international trade arena is very recent. 

For decades, we saw Brazilian goods being exported in a manner that was not completely competitive. Instead, Brazilian products were very often exported thanks to the support of artificial mechanisms offered by the government. 

During the 1990s, the country implemented a consistent 'privatisation' process of state-owned companies and reduced import taxes. In this context, local companies were forced to adapt to the new situation, fighting back against international competitors and becoming more competitive. 

In the last ten years, the Brazilian government started to play the game better, using the WTO as a forum to defend their interests and giving a different kind of support to exporters. 

One good example is the creation of Apex, an official agency focused on organising the participation of Brazilian companies in international fairs and events, and orienting businessmen on how to deal with global competition.     

What developments do you expect in the coming years with the international positioning of Brazilian firms?

Traditionally, the most relevant proportion of Brazilian exports has come from big companies. But it's possible to say that a new tendency is about to emerge: more small and medium-sized companies looking to the international market from now on. 

Latin America is an obvious region for those companies which want to start selling abroad, but we have seen other interesting moves, such as family-owned companies going to China to produce shoes, or small beverage firms trading with India, as well as typically Brazilian barbecue restaurant chains doing good business in the US.

In other words, in the years to come, Brazilian trade will be driven by a larger number of companies, including small and medium-sized ones.

It is important to remark that in the last 10-12 years, Brazilian companies and local subsidiaries of global companies have invested a lot of money in remodelling their facilities and buying new equipment and machinery, thus becoming more competitive and prepared to compete in different markets. 

Brazilian companies are in a better position to look for a more relevant role on the global arena whenever the economy goes up again. This will be a 'second wave'.

The general concern among businessmen is the over-evaluation of the real, the Brazilian currency, a fact that reduces the competitiveness of 'Made in Brazil' products.

Do you expect further regulatory cooperation between Brazil and the EU in the future? What will be the driver of this?

Regardless of present disputes on specific topics, Brazil and the EU will become closer partners in the near future. Mutual moves to achieve consensus on regulatory issues will come up.  

Europe may see Brazil as a very reliable partner, a country which does not threaten the region as Russia does on gas supply, for example. 

Brazil does not compete regarding the export of very cheap goods thanks to low salaries and unfair competition, like China does.