Brazil and South Africa Vow to Strengthen Trade and Economic Ties

19 May 2017

Economic and trade relations between Brazil and South Africa need to be strengthened, insisted Maite Nkoana-Mashabane, the South African Minister of International Relations and Cooperation, and her Brazilian counterpart Aloysio Nunes Ferreira following a bilateral meeting held in Pretoria, South Africa, on Monday.

Nunes Ferreira, who has been recently appointed as Brazil’s new Minister of Foreign Relations, concluded in the South African capital city one week of diplomatic engagement in Southern Africa, where he also visited Namibia, Botswana, Malawi, and Mozambique. In Mozambique, which is an important partner for Brazil in the region due its Portuguese heritage, as well as Malawi, the Brazilian minister signed a number of economic agreements and memoranda of understandings on various issues, such a visas, social security, or technical training, among others.

Nunes Ferreira’s visit has been interpreted by analysts as a sign of Brazil’s growing interest in developing deeper cooperation ties with Africa. In a communiqué issued ahead of the minister’s trip to Africa, the Brazilian Ministry of Foreign Relations underlined that Brazil’s interest in the continent has already manifested in various cooperation initiatives, in particular in terms of trade and investment.

“The visit reaffirms these ties and opens up prospects for cooperation with Africa, which is one of the most promising regions for the promotion of economic and commercial partnerships, and an actor destined to assume increasing prominence on the global stage”, reads the press release.

Strengthening the partnership between Brazil and South Africa

Speaking after the bilateral meeting held in Pretoria, Nunes Ferreira insisted on the Brazilian government’s determination to intensify bilateral cooperation with South Africa for the mutual benefits of both countries, including through efforts aimed at promoting both countries’ “common interests” at the global level. He mentioned, in particular, the importance of collaboration at the UN, or in fora such as the IBSA (India, Brazil, and South Africa) Forum, the group of BRICS countries, and the G20.

“It is my goal to work towards renewing the Brazil-South Africa Strategic Partnership and giving fresh impetus to the already strong relationship between our two countries,” said the Brazilian minister. The same objective was echoed by his South African counterpart. “We want to put more meaning to our bilateral engagements,” indicated Nkoana-Mashabane.

This should be pursued through an encompassing agenda, including various issues such as trade, investment, agriculture, science and technology, health, communications, defence, education, energy and environment, among others. The two countries agreed to finalise a number of mutual agreements in some of these areas.

On trade specifically, the South African and Brazilian ministers “expressed their willingness to work together for the strengthening of beneficial bilateral and regional trading relations,” indicates the joint statement.

In particular, hopes are high that the recent entry into force of the free trade agreement between the Southern African Customs Union (SACU, which comprises Botswana, Lesotho, Namibia, South Africa and Swaziland) and the Mercosur (whose current full members are Argentina, Brazil, Paraguay, and Uruguay) will boost trade flows between Brazil and South Africa.

The agreement, which is the first free trade agreement concluded by SACU as a single entity, includes concessions on more than 1000 products on both sides. A first version of the deal was signed in 2004, and then replaced by an updated agreement in 2008 after some outstanding issues were resolved between the two parties. The deal entered into force on 1 April 2016 following ratification by all signatories.

With commercial flows between South African and Brazil experiencing a downwards trend in recent years, from a total value of around US$2.5 billion in 2011 to approximatively US$1.8 billion in 2016 according to UN Comtrade data, the two governments’ representatives have indicated that the agreement could reinvigorate trade between their two countries. Nunes Ferreira indicated that promising sectors include chemicals, textile, steel, plastic, automotive, electronics and capital goods, as well as agricultural products.

Historically, Brazil has been a net exporter of goods to South Africa. In 2016, its exports to South Africa reached US$1.4 billion, while its imports of South African goods only totalled US$379 million. Trade between the two partners includes a relatively high proportion of industrial and manufactured goods.

“It is worth noting that 73 percent of Brazilian exports to South Africa and 58 percent of South African exports to Brazil correspond to high-value-added goods, which is quite impressive in light of the fact the global exports of both countries are highly dependent on commodities (above 60 percent in both cases),” insisted Nunes Ferreira.

Another area in which “closer cooperation” between the two sides should be promoted is investment, indicated the Brazilian minister. “Brazil is ready to discuss the adoption of a normative framework with a focus on the creation of direct lines of communication between governments, which would avoid judicialization of disputes regarding investments, while preserving the state's ability to address related social and environmental issues,” he said.

ICTSD reporting.

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