Brazil expands exports to Asia beyond China


Brazil is gradually discovering Asia beyond China in trade. First, the ASEAN countries: exports to Brunei, Cambodia, the Philippines, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam totaled US$12.1 billion in the first half of 2023, compared to US$4.5 billion in the same period in 2018.

The comparison by country is also important. Sales to Singapore, the heart of ASEAN (Association of Southeast Asian Nations), totaled US$4.4 billion in the first half of 2023 (US$1.1 billion in 2018). For Germany, the engine of the European Union, it was $2.9 billion ($2.5 billion in 2018).

“It’s very important to see Asia beyond China,” says Tatiana Prazeres, foreign trade minister at the Ministry of Development, Industry, Trade and Services.

“If we look at Asia as a whole, China’s stellar numbers dwarf other markets that are becoming increasingly relevant to Brazil and the world.”

By 2021, if you look at the early semesters, China accounted for 70% of Brazil’s exports to Asia, he says. In 2022 and 2023, also in the first half of the year, it was slightly lower at 65.9% and 67.9%, respectively, with Singapore, Thailand and Indonesia growing faster than China.

The case of Singapore can be explained in part by the export of a particular product, ‘bunker’, fuel oil for ships. It’s the world’s largest supply port, with more than 130,000 ships in and out each year, and Brazilian fuel was eventually favored by a new specification.

But in the first half of this year, “Bunker” exports fell even in value terms, while sales increased on several other fronts: crude oil, meat, machinery and equipment, coffee, iron ore and steel products.

“It’s not possible to determine the percentage of sales that is consumed in Singapore,” says Prazeres. “The country is strategically located so the port can be a distribution hub for the region, unloading goods from ships and onwarding them to other destinations across Asia.”

She emphasizes that Mercosur and Singapore are currently negotiating a trade agreement. “It would be a gateway to expand Brazil’s presence in this very dynamic region,” he says. “It is important that more Brazilian companies include Asia in their plans.”

For economist Marcos Troyjo, former foreign trade minister at the Ministry of Economy (201920), geopolitical and economic developments such as the increase in GDP per capita in populous Asian countries such as Indonesia, but also in India and China themselves, create “enormous opportunities for Brazil”.

“As Asia increasingly assumes the role of the epicenter of the world economy, trade with Brazil will only tend to increase,” says he, who is also a former president of the New Development Bank (Banco do BRICS), in Shanghai.

Troyjo points out that the share of foreign trade in Brazil’s GDP exceeded 35% last year. “The realignment of global value chains,” he adds, not only due to geopolitical shifts but also potential trade deals and the acceleration of reforms, opens up what he describes as an “excellent” panorama of the Brazilian economy.

However, he warns that “these great prospects could be jeopardized if there is an undesirable combination of stagnation in reforms and immediacy of politics for the next electoral cycles”.

Troyjo also says that “in a global context where food and energy security are paramount, infrastructure gaps in Brazil are no longer a national challenge” but are becoming a global problem.

Compared to ASEAN and Asia as a whole, trade with Europe is slower, as illustrated by the contrast in exports to Singapore and Germany highlighted by Troyjo.

Prazeres says: “Since the EU has a mature economy, imports from the Union are not expected to grow much, but although the market is less dynamic, it remains important.”

Noting the surge in Brazilian crude exports over the past year, which may have been affected by the war, he believes the BrazilEU trade deal would make sales more competitive and it would encourage investment and partnerships between the regions, boosting trade flows.

Economist Karin Costa Vazquez, from the Center for China and Globalization in Beijing and professor at OP Jindal Global University in India, notes that “Asian markets are expanding”, hence the contrast with Europe, and warns of problems ahead, with or without the BrazilEU deal.

“The CBAM [sigla em inglês para mecanismo de controle de emissão de carbono na fronteira] could be a major obstacle for Brazil and the EU,” he says, referring to the tariff approved by the European Parliament in May, which will come into force in three years.

She has lobbied for the new Brazilian government to bring Mercosur closer to ASEAN, particularly Indonesia and Vietnam, and other Asian giants like India by expanding product lists and the level of mutually granted preferences.