MINISTRY OF EXTERNAL RELATIONS Trade Promotion Department BRAZILA BRAND OF EXCELLENCE

IBSA THE -- DIALOGUE FORUM Pioneer cooperation agreement unites major developing countries ● Working together at the global level ● Sharing experience to attack social problems ● Potential benefits for Brazilian companies 2 Ministry of External Relations E-mail: [email protected] Fax: 55-61-3322-0833 Phones: 55-61-3411-6394/6395 DIVISION TRADE FAIRS ANDTOURISM E-mail: [email protected] Fax: 55-61-3411-6007 Phones: 55-61-3411-6577/6578 OPERATIONS DIVISION TRADE PROMOTION E-mail: [email protected] Fax: 55-61-3322-6312 6663/6668/6636 Phones: 55-61-3411- TRADE INFORMATION DIVISION E-mail: [email protected] Fax: 55-61-3322-0827 Phones: 55-61-3411-6392/6393 TRADE PROGRAMMESDIVISION www.braziltradenet.gov.br Website: [email protected] E-mail: [email protected] Fax: 55-61-3322-2392/2609 6240/6241/6242 Phones: 55-61-3411- 70170-900 Brasília-DF Esplanada dosMinistérios-BlocoH Palácio Itamaraty Anexo AdministrativoI-Sala220 DEPARTMENT TRADE PROMOTION Counselor PauloFeres Ambassador MarioVilalva, EDITORIAL ADVISERS RELATIONS MINISTRY OFEXTERNAL MARCH/2006 BRAZIL MINISTRY OFEXTERNAL RELATIONS Dirceu Brisola(MT8.961) RESPONSIBLE DIRECTOR http://www.brazilnow.com Fax: 551138757100 Phone: 551136724323 01254-000 SãoPauloSPBrazil Av. Prof. AlfonsoBovero, 323 Editora BrazilNowLtda. http://www.brazilnow.com [email protected] Editora BrazilNowLtda. CONTACT TO ADVERTISE PLEASE Ipsis Gráfica PRINTED AT Etoile Shaw PHOTO PRODUCTION Solange Melendez GRAPHIC PRODUCTION Assaoka.D Comunicação GRAPHIC DESIGN Lloyd /Masterfile,Ricardo Stuckert/ABr Holland, PeteWebb/Masterfile, R.Ian B Murauskas/Folha Imagem,Marcos Candisani/kino.com.br, LuizCarlos Almeida/Folha Imagem,Luciano Coetzee/Masterfile, Lalode Martins/Pulsar, GM;Hannelie Antônio Milena/ABr, Delfim PHOTOS Brian Nicholson ENGLISH EDITOR Roberto Baraldi ASSISTANT DIRECTOR Dirceu Brisola DIRECTOR ANDEDITOR ergamasco/Folha Imagem,New By LúcioAmorim,BrazilianAmbassadorinPretoria the relationship” Brazil-South Africa:“IBSAhasenhanced 18 in NewDelhi By JoséVicente deSáPimentel,BrazilianAmbassador South-South cooperation” Brazil-India: “Anew, dynamicprofile for 16 of growth andprosperity The IBSAeconomies-thecommonchallenge 7 The heartbeatofIBSA 6 Minister By CelsoAmorim,BrazilianForeign IBSA andworldtrade 4 most inSouthAfricaand India New studyidentifieswhich Braziliansectorscouldbenefit Opportunities and strategies 20 3 Brazil: theimportanceoftechnology 13. India:racingtothetop 11. CONTENTS 9. TheIBSApartners:keydata SouthAfrica:pushingforgrowth 7.

3 Ministry of External Relations 4 Ministry of External Relations ,BrazilianForeign Minister ticism from thosewhowere interested inmaintainingthestatusquo. spected participantinmultilateralnegotiations intheWTO,G-20initiallyfacedcriticismandskep- veloping countriesthatare interested inliberalizingagriculturaltrade.Today anestablishedandre- Brazil, IndiaandSouthAfricawasfundamental, forexample,insettinguptheG-20group ofde- weight initsrespective region andinitsglobalactions. than aunionbetweenthree great multiculturalandmultiracialdemocracies,eachofwhichcarries development viaSouth-Southcooperation.Nothingmore natural,underthesecircumstances, dialogue betweenBrazil,IndiaandSouthAfrica,wouldseekconcrete results forthepromotion of it laidemphasisonapragmaticalliancewhich,inadditiontoenhancingthepotential forpolitical question ofreviving North-Southrivalriesorofadoptingaconfrontational stance.Onthecontrary, importance ofcoordination andcooperationbetweengreat developingcountries.Itwasnota THE INDIA-BRAZIL-SOUTH AFRICA DIALOGUEFORUM This wasunderstandable.Theactionsofthe G-20provoked akindofrevolution inthe way The politicalbenefitsofthisassociationwere notslowinmaterializing.Coordination between Creation oftheIBSAForumin2003wasmotivatedbystrategicconsiderationsrelated tothe AND WORLDTRADE countries. need tofeeditsenormous population,andwiththoseofrelatively lessdeveloped porter, are unitedwiththoseofIndia,whosepositions reflectwiththe concern ing ofG-20,inwhich forexampletheinterests ofBrazil,amajor agriculturalex- racies ofthedeveloping worldisoneofthefoundations complex engineer- mate ofpoliticalconfidence generatedbythealliancebetweenthree great democ- G-20 andthecontactsthatmakeswith othergroups ofdevelopingcountries. ing more comprehensive, giventheoutreach andnetworkingcharacteristicsofthe G-4 -theUnitedStates,, IndiaandBrazil-theyendupbecom- fensive. Today, evenwhenconsultationstakeplaceinmore restricted circles likethe Quad”. Intermsofagriculture, theinterests ofthesecountrieswere basicallyde- States, theEuropean Union,JapanandCanada, knownintradeparlanceas“the agreements were drawnupbehindcloseddoorsby the“BigFour”-United such asBrazilhadtraditionallyplayedavery restricted role. InformerRounds,the that negotiationswere conductedatthe WTO,where evenimportantcountries Political coordination is justonesideofthe story. IliketosaythatIBSA willonly I canstatewithconviction thattheG-20wouldnotexistwithout IBSA.Thecli- Brazilian ForeignMinister GLOBAL CONTEXT By CelsoAmorim bear inmindthatoursalestodevelopingcountries Today's performanceisparticularlyexpressive ifwe ports, againstapproximately justathird 15yearsago. in general.Today thisrepresents 53%ofourtotalex- the contextofBrazil'stradewithdevelopingcountries so important. on commercial relations betweenthethree countriesis Brazil, IndiaandSouthAfrica.Thisiswhythechapter three of societiesandnotjustofthegovernments b root inpeople'simagination,andthisIincludethe become trulyestablishedoncetheconcepthastaken IBSA hasnot beenexploitedbefore, eventhoughithas South Africaitisautomobiles. Our principalexport product toIndiaisairplanes; around 87%of oursalesare ofmanufactured items. ports. Inthespecific caseofIndiaandSouthAfrica, degree ofaddedvalue thantheaverageofBrazilianex- important, giventhat it involvespr in 2000toUS$1.7million2005. where bilateraltraderose from around US$530million increase. We sawasimilartrend withSouthAfrica, 2005, ittoppedUS$2.3billion,amore than four-fold eral tradetotaledlittlemore thanUS$500 million;in change withthedevelopingworld.In2000, ourbilat- ple ofthesignificantgrowth ofourcommercial inter- fact Brazilhasbeensettingrepeated records. result oflowersalestodevelopedcountries, where in have alsobeenexpanding.Ithasnotcome aboutasa have beengrowing atatime whenouroverallexports usiness community. IBSAmustbeaproject ofour Trade betweentheIBSAcountriesmustbeseenin It's curiousthatthecommercial route suggestedby Trade withdevelopingcountriesisalsoqualitatively Trade betweenBrazilandIndia isanexcellentexam- oducts withahigher cludes Botswana,Lesotho,NamibiaandSwaziland. AfricanCustomsUnion,whichalsoin- the Southern diates astrong economicinfluencethroughout SACU, potential consumers.AndSouthAfrica,foritspart,ra- Gama. Afterall,Indiaisamarketofmore thanabillion made geographicalsensesincethetimesofVasco da operate commonflightsbetweenthethree countries. w cluded afirst-evertrilateralagreement forairtraffic move thisbottleneck.InAugustoflastyear, wecon- tween thecountriesofIBSA,andweare workingtore- tutes anobstacleforthedevelopmentoftradebe- bers ofMercosul andSACU. boldness, but theresults willcertainly berewarding. great marketsthatIBSA hastooffer. Thiswill require mental hurdles thatstillseparateus andtoseekoutthe up tothebusinessmen themselvestoovercome the three countriesandtheir neighboringregions. Itwillbe promotion oftradeandinvestments inthearea ofthe ties oftheIBSAcountries excellentconditionsforthe and technicalbarriers - willgivethebusinesscommuni- of amore specificnature, suchascustomscooperation the three countriesofIBSA,butalsothe othermem- - atrilateraltradeagreement thatwillinvolve notjust These provide theframeworkforaunique negotiation tial Trade Agreement betweenMercosul andIndia. SACU. AndinMarch of2005wesigned the Preferen- erential Trade Agreement betweenMercosul and liberalization. Attheendof2004,wesigned thePref- vancing. And negotiationsforaseafreight agreement are ad- hich allowscompaniesofthemembercountriesto The lackofdirect airandseaconnectionsconsti- The conclusionofalltheseagreements -plusothers There isalsomuch tobedoneinthear in 2005. Economic ForuminDavos,Switzerland Inácio LuladaSilvaduringtheWorld Mbeki (l)andBrazilianPresident Luiz (Left) SouthAfricanPresident Thabo Rashtrapati BhawaninNewDelhi,2004. Abdul Kalamduringareception atthe Lula daSilva(l)andIndianPresident APJ (Above) BrazilianPresident LuizInácio ea oftrade

5 Ministry of External Relations 6 Ministry of External Relations mainly to address political issues in macro terms, toafunctioning alliancethatseeks mainly toaddresspoliticalissuesin macroterms, equality (includinggenderequality)-andwefacesimilarproblems;our people,our “They (theIBSAcountries)arethreecountriesthathaveanimportant roletoplayin countries.... IBSA has been,andwilllikelycontinue to be,anincreasingly successful countries facesimilarproblems.Itisinthatcontextonecanlook atthecoming countries intothecompetitiveworld marketthrough looseningtheirbondswiththe U.S. andotherrichnations,whileforging strongertiesamongstthemselves.... Since “We thinkthisreallywillgiveaconcretemeaningtowhatwealwaystalkaboutas their respectiveregions;theyarethreedemocracies,countriesinwhich democracy South-South cooperation,becausethesearethreecountriesoftheSouth whocan problems, butwhicharewillingtofacethem;andtheythreecountries which well notonlyforourtrilateralcooperation,butI'msure,incourseof time,itwill to discussandresolvespecificworldwide questionsprevalentamongdeveloping plays animportantroleinpoliticallife;theyarecountrieswhichalso havesocial become amodelofSouth-Southcooperation amongthecountriesofSouth.” together ofthesecountrieswithadegreeexcitement,becauseitall goesvery “We sharecommonvalues-ofdemocracy,inclusiveness,humanrights, its inceptionin2003,IBSAhasprogressed fromaloosepartnershipconstructed “These countrieshaveinitiatedadialogue basedonmutualenrichmentforthe developing world,andareincreasingly prioritizingtheentranceofdeveloping come togetheranddoalotamongstthemselves,improvethelives ofthe political format representingtheinterests ofthesethreeemergingpolitical format regional SOUTH AFRICANFOREIGNMINISTERNKOSAZANADLAMINI-ZUMA FORMER INDIANEXTERNALAFFAIRS MINISTERYASHWANT SINHA Press conference06June2003,afterIBSAministerialmeeting. have verysimilarvisionsinmanymultilateralissues.” BRAZILIAN FOREIGNMINISTERCELSOAMORIM behemoths withworldwide responsibilities.” The heartbeatofIBSA Same pressconference(originalinPortuguese). THE COUNCILONHEMISPHERICAFFAIRS Press memorandum, 15March,2006 peoples inthosecountries.” Same pressconference. driving factorsthathas economy isoneofthe high-wage modern, populations intoa sections oftheir incorporating huge common challengeof urban employment.The technology, low-skill rural subsistenceandlow- traditional economyof but eachalsohasalarge manufacture andservices, in agriculture,mining, has world-classcompanies economies. Eachcountry world's leadingemerging IBSA areamongthe South Africa-pushing forgrowth portance. Logically, the countryhas and stainlesssteelsis growing inim- and theproduction offerroalloys stimulated investment inprocessing, ports ofcoal.Thisnatural wealthhas and chromium, withsignificant ex- leading producer of platinum,gold natural resources -itistheworld's The threemembersof South Africaisfamousforitsvast Differences concealacommon To grow and spread prosperity andspread To grow trading pattern, stemming trading pattern, Each hasitsowndistinct question ofglobalization. country mustfacethe the restofworld. and catchupfasterwith frog unnecessarystages their development,leap- technologies tospeedup in usingtoday's many ofsamechallenges distribution. Buttheyface ofincome patterns income anddifferent levelsof have different IBSA. brought themtogetherin way rolling stockand syntheticfuels. manufacturing sectors includerail- machinery, whileother important builder ofminingequipment and importanceasa gained international lion mark. Other significantsectors annual outputnearing thehalf-mil- ducer ontheAfrican continent, with challenge It isbyfarthelargest vehicle pro- Moreover, eachIBSA The threecountries ECONOMY The transport, communicationsand infrastructure.services withmodern major urbancentersenjoy first-world timated 65%ofGDP in2005.The dominates theeconomy, withanes- mercial shiprepair. cals, fertilizers,foodstuffs andcom- include machinery, textiles,chemi- three IBSAeconomies. Excellence” looksatthe “Brazil aBrandof each other. from experience andlearn the benefitsoftheir all threecountriesshare auspices ofIBSAcanhelp and ideasunderthe interchange ofexperiences the world.Onceagain, negotiate withtherestof alliances andhowbestto best tostructureitstrading each mustdecidehow geographical realities,but resources, historyand in partfromverydifferent However, the servicessector In thefollowingpages,

7 Ministry of External Relations tourism sectors have all grown well the supply of skilled labor and reduc- Kingdom as South Africa's top cus- in recent years, and the banking sec- ing bureaucracy. tomer, taking 11% of all exports in The IBSA partners tor is recognized as world class. The country has poured substan- 2005, with Britain and the United That said, the country is still tial resources into the social area States close behind. Germany was Item / country India Brazil South Africa wrestling with the legacy of since the establishment of majority fourth-ranked export market but apartheid. There is severe income in- government. The pupil-teacher ratio was South Africa's top supplier, with Official name Republic of India Federative Republic of Brazil Republic of South Africa equality and chronically high unem- at public schools has been reduced 14% of the market, followed by ployment. Economic growth has from 43 to 1 in 1994 to 38 to 1 in China, the United States and Japan, Land area 3,287,590 km2 8,547,404 km2 1,221,038 km2 picked up in recent years but is still 2003, while the proportion of the in that order. President A.P.J. Abdul Kalam, Luiz Inácio Lula da Silva, , far short of the 6% sustained annual population with access to electricity Trade with China has been grow- elected 2002 elected 2002 elected 1999 level that the government sees as a rose from 32% to 70% in the same ing rapidly in recent years, and the minimum needed to allow the coun- period. two countries have a Joint Ministeri- Capital Brasília Pretoria (Executive), try to attack its great social problems al Commission. Chinese imports Cape Town (Legislative), and achieve the goal of halving Trade growing tend to focus more on raw materials Bloemfontein (Judiciary) poverty and unemployment by South Africa's foreign trade was such as iron ore, copper, chrome, National structure Democratic federal republic; Democratic federal republic; Democratic federal republic; 2014. severely restricted during apartheid, timber and paper pulp, while Chi- 28 states and 7 union 26 states plus federal district nine provinces “Fixed investment is key to eco- but grew at over 7% annually in nese exports are value-added prod- territories nomic growth,” the Johannesburg- subsequent years. Early this decade ucts such as domestic appliances. To based ABSA economic consulting it suffered from an adverse exchange some extent this mirrors trade with Currency Rupee Real Rand firm said in its January 2006 rate, but total exports grew almost Japan, which imports mainly miner- Exchange rate Rs45.07 R$2.34 R6.35 newsletter. To this end the govern- 12% in 2005 to the equivalent of als and sends back higher-value (US$1.00 at end 2005) ment has announced infrastructure US$52 billion, while imports were up goods such as automobiles and elec- development spending of around over 14% to US$55 billion (conver- tronics. This imbalance illustrates GDP US$727 billion (2005/06 est.) US$768 billion (2005) US$237 billion (2005 est.) US$50 billion in coming years. Other sion of US$1.00 = R6.36 for the one of South Africa's key challenges, key elements in the process include year). to increase the value-added content GDP growth 8.1% (est.) in FY 2005/06 2.3% (2005) 4.9% (2005 est.) attacking logistics costs, increasing Japan has edged out the United of its export profile. Income per capita US$667 US$4,174 US$ 3,453 (2003)

Foreign reserves US$134 billion US$54 billion (Jan/06) US$ 27.7 billion (Sep/05)

Total imports US$109 billion (2004/05) US$74 US$55 billion (2005)

Total exports US$81 billion (2004/05) US$118 US$52 billion (2005)

Foreign debt US$120 billion (2005 est.) US$110 billion (Sep/05) US$46,1 billion (June 2005)

Inflation 4,4% (2005) 5.25% (IPCA, Mar/06) 3.9% (average 2005)

Population 1.09 billion 184 million 46.9 million (2005)

Population aged 0-14 31.2% 27.9% 30.3%

Infant mortality 5,6% 2.7% (2004) 8%

Unemployment 9% (2005) 9.2% (Jan/06, metropolitan 26.2% (Sep/05) regions)

Life expectancy (years) 64/65 M/F 68/75 M/F 50/53 M/F

Main languages Hindi, English, Hindustani, Portuguese IsiZulu, IsiXhosa, Afrikaans, 14 others. Sepedi, English, Setswana Ministry of External Relations Ministry of External Relations Ministry of Sesotho, Xitsonga

Main religions Hindu, Muslim Christian Christian, Muslim

Sources - South Africa: data from Brazilian Foreign Ministry except trade (SA/DTI, converted at US$1.00 = R6.36); GDP, SA/Treasury and Stats SA; popu- lation, Stats SA; population, 0-14, CIA World Fact Book. India: CIA World Fact Book except GDP, trade and reserves from Brazilian Foreign Ministry; FX from Microsec. Brazil: Central Bank, Ministry of Development, Trade and Commerce, IBGE. 8 Tobacco is one of Brazil's top exports to South Africa. 9 India - racing to the top of the world

India is one of the fastest-rising sents only around 20% of GDP, with fied industrial base, but sometimes stars among all major emerging manufacturing adding 27% and ser- at the cost of lower efficiency. More economies. Recent economic growth vices 53%. recent reforms have opened up has been running at over 7% a year While much of Indian agriculture many sectors to foreign participa- and the economy has doubled in is still plagued by inadequate infra- tion, but the state still dominates size since 1993. The country now structure and the small size of farms, much of heavy industry, for example ranks 12th in the world, just ahead the country has been self-sufficient much of the steel sector, non-ferrous of Brazil, according to the World in food for many years now, and ex- metals (virtually 100% for copper, Bank's 2005 World Development In- ports rice - for example, to South lead and zinc, and about 50% for dicators. What's more, India is Africa. High-yield crops have been aluminum), shipbuilding, engineer- tipped by Goldman Sachs in its now- introduced in some regions, togeth- ing, chemicals and paper. famous study to overtake er with new techniques for fertiliza- In steel, India has become one of Japan and become the world's third- tion and irrigation. Over the years, the world's top 10 producers, with largest economy sometime before this has in some cases produced output of 31.8 million tonnes of 2035 - placing behind China and the quite significant increases in produc- crude steel in 2004/05. Growth is fu- United States, in that order. tivity. eled by exports to China and strong Agriculture remains very impor- One consequence of its relatively domestic demand, for example from tant, in particular rice and wheat, large subsistence agricultural sector the automobile, consumer durables with some 60% of the population is that India generates a smaller- and construction sectors. still living on the land. But much of than-average proportion of GDP Sectors showing significant ex- Chevrolet car plant near São Paulo: General Motors is a major exporter from Brazil to South Africa. the farming is at or little above sub- from manufacturing. Import substi- pansion include consumer durables sistence, so that together with fish- tution policies in past years helped such as home electronics, computer Potential of IBSA all of them vehicle builders - while South Africa has two free trade ing and forestry, agriculture repre- give the country a wide and diversi- systems and white goods. Vehicle The other two IBSA members are intermediate-level exporters with agreements and over 20 preference currently intermediate-level traders sales from US$10 million to US$50 agreements. Two significant accords with South Africa - India ranked million include Vale do Rio Doce, are the Trade, Development and Co- 13th both as an export destination Souza Cruz, WEG, Dell Computers, operation Agreement with the Euro- and as a supplier, while Brazil placed Agco, Perdigão, Marcopolo, Frango- pean Union (since 1999) and 11th among South Africa's suppliers sul, Universal Leaf Tobacco and Cop- “AGOA II”, the African Growth and but just 29th amongst the country's ersucar, thus demonstrating the Opportunity Act which improves ac- customers. However, the expectation wide diversity of Brazil's exports, cess for various types of clothing is that the advance of the trilateral which today go far beyond the into the US market. It is also a mem- forum can lead to much greater lev- stereotype of a raw material supplier. ber of SADC, the 10-nation South- els of interchange. The presence of Marcopolo ern Africa Development Coopera- South Africa has various co-oper- among the major exporters is an in- tion. ation agreements with India. Sectors teresting example of how bilateral As a member of SACU, the include technology, telecommunica- relations could develop. Since 2001 Southern African Customs Union tions and small businesses. There is the bus and truck builder, Brazil's which also includes Botswana, an India-South African Commercial largest, has operated a 700-bodies- Lesotho, Namibia and Swaziland, Alliance, and the two countries have per-year plant at Germiston, in Gaut- South Africa is involved in major FTA set up a Joint Ministerial Commission eng Province. It is one of six overseas talks with the United States as well - JMC. Amongst other things, this al- operations the company has set up as the European Free Trade Area Ministry of External Relations Ministry of External Relations Ministry of lows for ministerial consultations on in its drive to compete globally - one (EFTA), and recently inked a deal political and economic matters. of them is a technology transfer op- with Mercosul. Major exporters from Brazil to eration in China. Today Marcopolo Other free trade negotiations are South Africa, with sales in 2005 sells in over 80 countries with the reported under way with Kenya, above US$50 million, include Gener- Germiston plant essentially supplying Nigeria, China, Singapore, South 10 al Motors, Volkswagen and Scania - the African market. Korea and Japan. Soy oil is Brazil's second-biggest export item to India. 11 growth of the overall services sector. globally competitive prices. and a major Brazilian private bank. New Delhi signed a Comprehensive Who sells what to whom Services and advanced technolo- India over recent years has been Economic Cooperation Agreement Petrol and pills gy are not yet a major factor within gradually reducing trade protection (CECA) with Singapore, and early From India From Brazil From South Africa India's imports and exports are the bilateral flow, but some Brazilian and has been more actively seeking this year concluded a preferential To India Total: US$602 million Total: US$1.16 billion dominated by precious stones - the companies are operating in the elec- bilateral trade agreements. The trade agreement with Chile that will 1. Petroleum (crude) 1. Aircraft country has a major traditional busi- tronics and IT sectors in India, and country signed limited free trade facilitate export of Indian textiles, 2. Soy oil 2. Phosphoric acids ness in cutting and polishing gems, some Indian companies have estab- agreements with Sri Lanka in 1998 chemicals, pharmaceuticals and ma- 3. Sugar cane 3. Coal 4. Ethanol 4. Gold which are then re-exported. Pearls lished joint ventures in Brazil. A cred- and Thailand in 2003, and it has chinery, while Chile will enjoy re- 5. Petrochemicals 5. Wood pulp and precious and semi-precious it line for the sector was established preferential agreements with duced tariffs for its copper, pulp, Top 5 = 67% of total Top 5 = 63% of total stones represented 17.1% of im- 2002 between the Indian Eximbank Afghanistan and Mercosul. Last year newsprint, wood boards and salmon. To Brazil Total: US$521 million Total: US$235 million ports and 16.7% of exports in 2004. 1. Petroleum (refined) 1. Alloys Other top export items were miner- 2. Chemicals 2. Iron products 3. Pharmaceuticals 3. Coal als, organic chemical products and 4. Synthetic fibers 4. Chemicals clothing. Major imports were boilers 5. Machinery 5. Autoparts Top 5 = 82% of total Top 5 = 63% of total and machinery, electrical equipment, fuel oils and organic chemicals. Brazil - buildng technology into everything To South Africa Total: US$1.11 billion Total: US$885 million Top customers for Indian prod- 1. Light oils 1. Autoparts 2. Vehicles 2. Frozen chicken ucts in 2004 were the United States, 3. Rice 3. Tobacco the United Arab Emirates, China, 4. Medicines 4. Vehicles 5. Chassis + engine 5. Tractors Hong Kong and the United King- Top 5 = 32% of total Top 5 = 40% of total dom, while major suppliers were Like India and South Africa, Brazil According to the Agriculture Min- included agriculture, not just for its China, the United States, Switzer- today blends elements of a modern, istry, Brazil has some 62 million importance in resolving hunger and A B Sources: A - Funcex/Secex 2003/04 average. land, Belgium-Luxembourg and the world-class economy with substan- hectares under the plow, plus anoth- social problems, but also as a key A A B - South Africa, Department of Trade and Industry 2005. United Arab Emirates, a trading pro- tial traditional, low-productivity sec- er 200 million hectares of pasture, area for technological cooperation Conversion: US$1.00 = R6.36 (2005 average). B A file that in part reflects the weight of tors. This holds true throughout the much of this under-utilized. The between the three countries, rank- the gems trade within the overall economy, be it agriculture, manufac- strategy is to gradually transform ing alongside sectors such as energy, statistics. turing or services. The goal of the some 90 million hectares of pasture space, aviation and information production soared from 4.2 million sector has thrust the country to the India's two IBSA partners placed government is to stimulate expan- into arable land, so potentially more technology. units in 1998/99 to 7.3 million in international limelight in recent fairly low down the trade list. South sion of the more productive, high- than doubling the grains harvest, es- Brazil's great natural advantages 2003/04, although three quarters of years, with phenomenal growth esti- Africa took just 1.1% of India's ex- value activities while investing heavi- timated for 2005/06 at around 125 as an agricultural producer and its these were motorbikes and scooters. mated at around 50% a year since ports in 2004, and Brazil just 0.7%. ly in education and other social pro- million tonnes. If that sounds ambi- huge potential for feeding the world Non-durables have also performed 1993. There is ever-growing integra- As suppliers, the two countries' re- grams to help reduce poverty and tious, it's worth recalling that the lie behind the country's strong stand well, thanks in great part to rising tion with major companies in Europe spective shares were 2.1% and equip people to find better jobs. Brazilian harvest has already doubled in international trade negotiations, disposable incomes, easy access to and North America, for example via 0.7%. Statistics show that some four in just over a decade, from 58 mil- insisting that developed nations re- finance and the changing consump- the international outsourcing of call Nevertheless, commercial rela- out of every five Brazilians live in lion tonnes in 1991. What's more, duce their protection. tion patterns of India's rapidly ex- centers, reservation desks and finan- tions between India and Brazil have towns, but many of these are small, this new expansion can happen panding middle class. cial backroom services. The wide- grown substantially. In 1998, Brazil- rural settlements where much activi- without felling any forest and with- High-tech sales Textiles, perhaps the most famous spread fluency in English gives India ian exports were just US$145 million ty is still linked to the land, for exam- out reducing beef production, cur- However, neither the government of India's traditional manufacturing an obvious head start in this sector. and imports US$212 million, mean- ple through informal day-labor. The rently at over 8 million tonnes per nor the private sector see agribusi- sectors, now represent around a IT turnover was estimated at US$22 ing that bilateral trade has more great success story of Brazilian agri- year, as ranching continues its trend ness as Brazil's only development fifth of total export earnings. The in- billion in fiscal year 2004/05, some than tripled since then. One reason culture in recent years has been its toward greater use of technology, priority. Gone are the days when the dustry has a natural competitive ad- 3% of total GDP. is a deal for Brazil to export crude oil vast expansion in the Center West with more confinement and less country's export schedule comprised vantage thanks to its large multi- The United States takes around to India and buy back refined petro- and the vast Cerrado region lying free-range production. mainly raw materials. For people fiber base, abundant cheap skilled 70% of India's software exports, leum products, thereby resolving a south of the Amazon. Previously International experts have likened who still think of Brazil as an ex- labor and presence across the entire followed by the United Kingdom lack of suitable refinery capacity in thought to be too acidic, high in alu- this vast expansion of Brazil's food- porter of coffee, it can be quite a value chain of the industry, ranging with 14% and the rest of Europe an- Brazil and taking up slack capacity in minum and low in phosphorus, producing capability to the opening shock to learn that for some years from spinning and weaving to the other 9%. Indian software firms are India. Another contributory factor potassium, calcium, magnesium for up of the American Mid-West, and now, one of Brazil's top exporters Ministry of External Relations Ministry of External Relations Ministry of final manufacture of garments. This world leaders in the banking, fi- has been Brazil's internationally-ac- profitable agriculture, the Cerrado suggested that the technologies has been Embraer, the jet passenger should help make the country well nance and insurance sectors. Soft- claimed program to provide free soil has been transformed into one Brazil is developing for tropical agri- plane maker based just outside São placed to benefit from increasing lib- ware exports grew at an annual av- treatment for HIV-AIDS victims - of the world's great new food pro- culture can be applicable in various Paulo. eralization in international textile erage of 36% between 1995/96 and Brazilian health authorities have ducers thanks to advances in fertil- parts of Africa and Asia. In fact, manufactured items are and garment commerce. 2003/04. Not surprisingly, IT and found that Indian pharmaceutical ization, seed technology and in No wonder then that from the now 55% of Brazilian exports, with 12 India's information technology telecommunications have led the labs can provide quality drugs at some places irrigation. start, the IBSA Dialogue Forum has commodities just 30%. And high- 13 14

Ministry of External Relations i pean Unionwastopcustomer, tak- erals, meatandchemicals.TheEuro- ucts, soy, petroleum andfuels, min- lion, followedbyengineeringprod- US$19.1bil- airplanes etc),earning transport equipment(vehicles,parts, tor, thecountry'stopexportswere against 37.5%ayearearlier. Bysec- 40.1% ofindustrialexportsin2005, are edginguptheirparticipation: and medium-hightechnologygoods goods just 11.5%. capital goods20.9% and consumer account for51.3%of thetotal,with 0.9% to1.13%. creased itsshare ofworldtradefrom over thelastdecade, Brazilhasin- ered byafree tradeagreement. And the majorityofwhichare notcov- now sellingtomarketsworldwide, than 17,000Braziliancompaniesare and competitiveeconomy. More 19.2%. largest individualimporter-third on 21.5% andtheUnitedStates- Latin Americaclosebehindon ng 22.4%ofBrazil'sexports,with The bottomlineisadiversified On theimportside,raw materials tential cooperationwithinIBSA. this represents alogicalarea ofpo- areas offinancialtechnology, and has world-classsolutionsinmany operational costs.Today thecountry up bankingtransactionsandreduce intensive investmentsinITtospeed sophisticated financialsectors,with gave Braziloneoftheworld'smost high inflation-whichended1994 p and loansavailableforideasthat cubators forfledglingcompanies business cooperation.There are in- development, includinguniversity- end itissupportingITresearch and boost thistoUS$2billion.To this hasambitiousplansto government US$314 millionin2005,butthe are stillfairlymodest,anestimated promote exportsissoftware. Sales haps fivemillionspecies intheAma- that onlyatinyfraction oftheper- natural diversity-scientists estimate biotechnology. Thecountryhashuge within thedeclared scope ofIBSAis interest toBraziland fallingdirectly rove theirfeasibility. Theperiodof Another high-techarea ofgr One area where Brazilseeksto eat ernment openedtheAmazon ernment In2002thefederalgov- ored yarn. cotton thatproduce naturallycol- the developmentofnewstrains asite thatattackscitrusgroves, and search intopestsliketheXylellapar- ous fronts, forexamplegeneticre- have madesignificantstridesinvari- ties andpublicresearch institutes alone properly researched. Universi- sects, haveyetbeenidentified,let zon, thegreat majorityofthemin- tries inbiotechnology, butourca- “Brazil isoneofthe leadingcoun- nando Furlantocomment that dustry andTrade MinisterLuizFer- for trade,leadingDevelopment, In- priority bothforindustrial policyand Biotechnology hasbeen namedasa benefits offuture discoveries. ensure thatBrazilcanshare inthe drugs companies,forexample-to potential privateusers-foodand conduct research inpartnershipwith Biotechnology Center, designed to productivity and pestresistance thanksto Cotton (above),coffee (aboveright)and beef (right)are allincreasing their Technology isapriorityforBrazil government-sponsored research. throughout the economy. iff barriersandreducing importdu- very limited.” benefit andintojob creation isstill pacity totranslatethis intoeconomic Brazil startedeliminating non-tar- Mercosul fifth member andBolivia,Chile, Uruguay, withVenezuela arecent ing Argentina,Paraguay and the Mercosul customs unioninvolv- tiveness withinitseconomy. Today unilateral movetoboost competi- ties atthestartof Ninetiesasa were up10.4%to US$7.1billion. from Mercosul partnersin2005 biggest tradingpartner. Imports sul, Argentinaisof coursethe Merco- exports asawhole. Within higher thantheaverage forBrazil's manufactured items, significantly Brazil's salestoMercosul were of over 2004.Interestingly, 92%of total andanincrease ofalmost32% lion, representing 9.9%oftheyearly rest ofMercosul were US$11.7bil- lion surplusfortheLatinbloc. ¤ and the15-memberEUtotaled been underwaysince2000. for abi-regional free tradearea have European Union,where discussions of theAmericas(FTAA), andwiththe within thetalksforaFree Trade Area members havenegotiatedasabloc free tradeagreement. TheMercosul sociates, isBrazil'smostimportant Colombia, EcuadorandPeruasas- 46.6 billionin2004,witha¤ In 2005,Brazil'sexportstothe Trade ingoodsbetweenMercosul 0bl- 10 bil

15 Ministry of External Relations 16

Ministry of External Relations nation, with itsparadoxes,is the reality havebeenunique. TheIndian but theimpactsofhistory onIndian are affected bytheircircumstances, we are toexplainIndia. Allcountries the current pr modernization widely spoken. technicians. What'smore, Englishis business communityandworld-class tutional structures, anexperienced the advantagethatithassolidinsti- is likeChina15yearsago,butwith more pleasant.Intruth,Indiatoday through Aprilwhentheclimateis executives, particularlyfrom October in NewDelhiare packedwithvisiting from oftheglobe.Hotels allcorners ever more strongly, forbusinessmen tion thattheIndianmarketholds, pies intheglobalcontext. gic positionthatthecountryoccu- tense paceofgrowth andthestrate- ments neededtomaintainthein- together withthescaleofinvest- cies, despitechangesingovernment, the Ninetiesthrough consistentpoli- been accumulatedsincethestartof combination oftheassetsthathave tier ofthe21stCentury, thankstoa its claimastheneweconomicfron- by thegreat powersandisstaking The countryisbeingopenlycourted commercial pointofview. tive aswelltheeconomicand the politicalanddiplomaticperspec- makes completesense,from both Brazil-South AfricaDialogueForum- However, wemustlookbeyond It isimpressive toseethefascina- India hasbecomefashionable. Seen from India,IBSA-theIndia- By JoséVicente deSáPimentel,BrazilianAmbassadorin NewDelhi “A new, dynamicprofilefor South-South cooperation” oject if dom ofpolitical organizationand in directed tothepreservation offree- the birthofRepublic hasbeen Gandhi, India'sforeign policysince latitudes. ent from thatwhich prevails inother this countryiselastic and verydiffer- and second,theconceptoftimein dignified andnobleimageofitself, understand that,first,Indiahasa other, interpreted theIndiansoul,I tual leaderwho,betterthanany From thesedeclarationsofthespiri- dence, butalsotoworldpeace. pathway notjusttoIndianindepen- ha”, orpeacefulresistance, wasthe War, Gandhistatedthat“satyagra- view, atthestartofFirstWorld with reservation.” Inanotherinter- should treat thelessonsofEurope that reason suggestedthat“we but ahundred yearsold”andfor phasized that“Westerncivilizationis Back in1908,MahatmaGandhiem- country hasofitsrole intheworld. social relations andthevision sophical conceptions.Theseshape fruit ofage-oldtraditionsandphilo- Ambassador José Vicente deSáPimentel. Ambassador JoséVicente In linewiththeteachings of BRAZIL -INDIA are growing twice asfastthoseto exports tootherdeveloping nations North. Statisticsshow thatBrazilian South andUS$56 billion tothe We exportedUS$62 billiontothe tries thantothedeveloped world. Brazil soldmore todeveloping coun- but alsomarkingthe firsttimethat just becauseoftheoverallvolumes an historicyearforforeign trade,not for IBSAinBrazil,where 2005was tion. the idealofSouth-Southcoopera- and givesanew respect issues tomajorinternational strengthens commonpositionswith and symbolicvalue.Itsimultaneously view hasbothpracticalimportance tries, IBSAfrom theIndianpointof tween three great developingcoun- for articulationandcooperationbe- for IBSA.Asapioneermechanism party. tion whichisheadedbythesame remains coali- aliveinthegoverning deep roots withinIndiansocietyand the independencemovement,has The momentisequallyfavorable The Indiancontextisauspicious Congress Partyandof Nehru, leaderofthe launched byJawaharlal diplomacy. Thetradition central pillarsofIndian circlesternational remain sitions inregional andin- the independenceofpo- sis ondevelopmentand tions. Today, theempha- tween developingna- promoting theunionbe- , dynamicprofile to decade. With SouthAfrica, the in- decade. With up 383%sincethestartofthis namism. BilateraltradewithIndiais South Africaisproof ofthisdy- South. tomorrow's marketsare inthe their relative importance.Inshort- for developingcountriestoincrease p while thosefrom theSouthhaveex- in theNorthhavegrown by33% same period,importsfrom countries those totheNorthjust99%.In the Southhavegrown by214%; of the21stCenturyourexportsto developed countries.Sincethestart ercise hasset in motionaprocess tant howeveristostress thattheex- the respective markets. More impor- on thedegree ofmutual accessin yet tomakeanysignificant impact symbolic value,these accords have Customs Union.Putting asidetheir African with SACU,theSouthern ential agreements withIndiaand 2% ofeachother'sforeign trade. ually represent somethinglikejust of thethree countries,whichindivid- they are stillwaybelowthepotential pressive thesenumbersmightlook, crease was317%.Buthoweverim- The Baha'iLotusTemple expression inNewDelhi:modern oftraditionalvalues. anded 111%.There isacleartrend Brazil's tradewithIndiaand In 2005,Mercosul signedprefer- spected asserviceproviders. nology, andtheyare increasingly re- tive inagriculture, industryandtech- rials andenergy, theyare competi- these countriesare richinrawmate- of overUS$2trillion.Asagroup, people andjointeconomicproduct bined populationofover1.3billion would involve11countries,acom- of Venezuela intoMercosul, this free theentry tradeagreement. With which shouldculminateinatrilateral the airlineswillsavemanyhoursof graphically andculturally. However, distance betweenus,bothgeo- culties. Perhapsthegreatest isthe mon culturalactivities inthear which willalsobenefitfrom com- personal level,stimulatingtourism, ages willpromote interchange atthe Cheaper fares andattractivepack- Cape Town, MumbaiandNewDelhi. Janeiro, SãoPaulo,Johannesburg, their flighttimesbetweenRiode airport timebysimplysynchronizing wood toBrazil andpavetheway for agreements forfilms willbringBolly- ocean freight, while co-distribution nections willlead to growth of arts. Lowerchargesand fastercon- music, danceandthe audiovisual where thethree countries excel- IBSA willundoubtedlyfacediffi- eas efits ofthe partnership. can more quicklymaximize theben- alistic andpromising. Inthiswaywe comes aware thatIBSA istimely, re- within itthebusiness community be- tant isthatBrazilian societyand But theballisinplay. What'simpor- are more opentogettingtogether. Africans whoshowmore interest, or it mightbeourselvesandtheSouth Brazil thatvice-versa.Inothersectors ergy inseekingoutopportunities men mightseemtoshowmore en- At somemoments,Indianbusiness- in theopportunitiesnowavailable. by manyotherswhoare interested terchange ofresearchers, artistsand discussions.Greaterternational in- interests ofthethree partnersinin- search, commonundertakingsand biotechnology willstrengthen there- space, nucleartechnology, ITand operation inareas suchasenergy, have beentriedbyourpartners.Co- offer valuablecluesforsolutionsthat mental, healthandothersectorswill ucational, academic,social,environ- our individualexperiencesintheed- ayurvedic medicine.Dialogueabout become betteracquaintedwith ans football-whynot?andwecan and Africa.BrazilianscanteachIndi- Brazilian cinematobeshowninAsia that todayexistwillbefilled we waittoact,thespaces also inBrazil. scheduled forSeptember, tries, whohaveameeting ofthethreeernment coun- be senttotheHeadsofGov- of theForeign Ministerswill through 31.Theconclusions de Janeiro from March 28 ing ofIBSA,tobeheldinRio at theThird MinisterialMeet- among itemsontheagenda dence andgeneratebusiness. will helptoincrease confi- regions closer. Andallofthis countries andtheirrespective willbringthethreejournalists The omensare good.If These topicswillbe

17 Ministry of External Relations 18

Ministry of External Relations tive reaction. emption immediately sparksaposi- seeking atravelvisa -thevisaex- sively rigorous regulations when selves frequently subject toexces- for Braziliancitizens- who are them- with themaximumof freedom. And basic humandesire tocomeandgo fered suchaclearrestriction onthe ple who,underthepasslaws,suf- strating Brazil'ssympathyforapeo- tinues tohavetheeffect ofdemon- ten yearsnow, thisagreement con- two countries.Inplaceforalmost movement ofcitizensbetweenthe This ofcoursegreatly facilitatesthe Africa, hasbeenthevisaexemption. desire tostrengthen tieswithSouth ment, intermsofsymbolizingour the bilateralrelationship. a legalfoundationonwhichtobuild cial cooperation.Thesehavecreated nology, andtechnicalcommer- the areas ofculture, science,tech- range ofagreements, forexamplein tions andhavenegotiatedawide have encouragedvisitsinbothdirec- Pretoria. ic offensive toforgeclosertieswith that Brazillaunchedareal diplomat- fice underNelsonMandelain1994 tookof- first majoritygovernment repudiation ofapartheid. blossom, mainlybecauseofBrazil's since 1948,ourrelationship didnot diplomatic relations withPretoria old. AlthoughBrazilhasmaintained cent -effectively littleovertenyears Africa isinmanywaysrelatively re- IBSA hasenhancedtherelationship Perhaps themostimportagree- Since then,thetwocountries It wasonlywhenSouthAfrica's Brazil's relationship withSouth By LúcioAmorim,BrazilianAmbassadorinPretoria BRAZIL -SOUTHAFRICA other better atalllevelsandtointer- lantic neighborstoget toknoweach came appropriate for thetwoAt- world ingeneral. power, andwiththeAnglo-Saxon United Kingdom,the former colonial has traditionallyenjoyed withthe ties suchasthosethatSouthAfrica and alackoftraditionalcommercial and adearthofairsealinks; other; there were languagebarriers countries knewlittleabouteach established democracy:ourtwo culties wefacedwhenSouthAfrica achievement, giventhevariousdiffi- growth mustbeseenasamajor 1993 toUS$1.7billionin2005.This jumped from justUS$320,000in the sameway. The bilateralflowhas quencies onthisroute. for yetfurtherexpansionoffre- as apassenger, Ifeelthere is room been fullydemocratic.Andspeaking seven aweeksinceSouthAfricahas tries, passingfrom oneaweekto cial flightsbetweenthetwocoun- tributed tothegrowth incommer- Brazilian AmbassadorLúcioAmorim Finally, in1994,conditionsbe- Commerce hasbeengrowing in This hasundoubtedlycon- but alsoglobalresonance. bodied notonlycontinentalweight, oping adiplomaticstrategythatem- the countrywassuccessfulindevel- place throughout thepublicservice, spite thestaff restructuring thattook some mighthaveanticipated.De- to bemore skillfulandcapablethan world. of apartheid,andopenuptothe was aconsequence al isolation,which growing internation- its struggleagainst country couldforget matic activity. The profile ofitsdiplo- radically alterthe ria wasdisposedto of democracy, Preto- that withtheadvent other things,wesaw Africa. Amongst the newSouth Africa -particularly much aboutSouth act more andmore. ronment andsustainabledevelop- dealt withthequestion oftheenvi- tion ofracism,the countryhas ership thatitbrought totheques- Showing thesamedegree oflead- questions. all majorinternational playing acentralrole indebateson Racism. Butitwent much further, 2001 UNConference Against ence -forexample,byhostingthe more directly toitshistoricexperi- agenda that relatedternational involved insubjectswithinthein- In doingthis,SouthAfricaproved B South Africanaturallybecame razil haslearned previously inBrazil. the “Rio92”eventheld10years South Africaprovided continuityfor ence onthesubject.Inthisway, ment, hostingthe2002UNconfer- information societyandrelated logue withSouthAfrica aboutthe erating ourestablishment ofadia- IBSA hasbeenfundamental toaccel- ships withinthegroup. Forexample, r a catalystforactivities thatwere a see thatcreating IBSAhasservedas Ambassador toSouthAfrica,Ican Forum. India-Brazil-South AfricaDialogue new trilateralbodycalledIBSA,the tion tojoinwithIndiainforminga when weacceptedPretoria's invita- that intoourforeign policystrategy the newSouthAfricaandwebuilt conscious oftheglobalprojection of Inácio LuladaSilvawasextremely high degree ofconverginginterests. African positions,wediscovered a we observedtheevolutionofSouth stage.And,as on theinternational Pretoria: Thebeautiful1913UnionBuildingisthepresidential residence andseatoftheexecutivebranchgovernment. of occupyingaplaceprominence with aspirationssimilartoourown macy becameaware ofacountry egular partofthebilateral relation- From myperspectiveasBrazilian ofPresidentThe government Luiz Thus itwasthatBraziliandiplo- outwards, totheworld. aspect ofapartnershipthatlooks tion ofIBSA,inmyview, hasbeen its pated intheDialogueForum. of theForeign Ministry, havepartici- Brazil which,underthecoordination ious areas ofthepublicservicein well understoodthroughout thevar- major globalissues. tries meet,theyfrequently focuson foreign ministersof the three coun- the group communiqués, whenthe with diplomacy. Aswecanseefrom ting thatthesamething happens cussions. Itisperhaps evenmore fit- the realm dis- ofwiderinternational sought coordination onissueswithin group relations, butalsohave tivities thatare inherent tointra- not justtakenundertheirwingac- Working Groups withinIBSAhave nance anddigitalliteracy. themes suchaselectronic gover- South Africa.Theuniquecontribu- sion ofourbilateralrelationship with would ofitselfhaveledtoanexpan- lations withtheAfricancontinent crease thesignificanceofBrazil'sre- termination ofPresident Lulatoin- It iscleartomethatthishasbeen Effectively, variousSectorial In thisway, bycoordinating I suspect,however, thatthede- governance. governance. nisms thatare relevant toglobal for influenceinthevariousmecha- Africa havereinforced theircapacity d current importanceininternational amongst themselvesonissuesof activity, andinparticularitsinterna- main astothevalueofthistrilateral tion meetingatCancunin2003. role attheWorld Trade Organiza- IBSA playedawidelyrecognized tional impact,Iwouldrecall that coordinated action. issues andbycreating aplatformfor ening ourdialogueon international South Africa,aboveall bystrength- the relationship between Braziland the G-20. far astoidentifyIBSA astheseedof WTO itself.”Someanalystswentso coincide withtheobjectivesof forms which,attheendofday, tive manneraround commonplat- tries tocometogetherinaconstruc- “possible forthedevelopingcoun- that WTOmeetingshoweditwas tion oftheG-20group, statedthat cún”), whenreferring totheforma- Lesson ofCancun”(“LiçãodeCan- Amorim, inanarticleentitled“The ebate, India,BrazilandSouth Brazilian Foreign MinisterCelso In conclusion,IBSAhas enhanced Should anydoubtre-

19 Ministry of External Relations 20

Ministry of External Relations Cape Town: Tourism isapriorityforIBSA. exporters withinIBSA. opportunities forBrazilian and lookingspecificallyat African CustomsUnion, and SACU,theSouthern between Mercosul,India examining traderelations Brazilian ForeignMinistry commissioned bythe recently concludedastudy Foreign Trade Studies, Foundation Centerfor Funcex, theRio-based Spotting opportunitiesandplanningstrategies South AfricaandIndia Brazilian exports to in thosemarkets.Inthe and tradepolicyinitiatives Brazilian tradepromotion to therestofworld. been growingfasterthan Brazilian exportshave dynamic marketswhere exports, theyarelarge and destinations forBrazilian India arenotyetmajor that whileSouthAfricaand “There isroomfor The studyconcluded TRADE Funcex study. summary ofpartsthe concluded. expansion,” thestudy important toolfortrade liberalization couldbean further preferentialtariff suppliers. Inbothcases, in competingwithother represent adisadvantage for Brazilianproductsmay case ofIndia,freightcosts Following isanedited value, representing about75% of Brazil's 200topsellers intermsof products, thestudythen selected were identified competitive sectors How Brazil's value. Brazil, but83%of total salesby total numberofitems exportedby ucts represented only 26% ofthe comparative advantage.Theseprod tem (HS).Ofthese,804revealed a six-digit leveloftheHarmonizedSys- exported 3,636products, usingthe ated bytypeofproduct. having protection regimes differenti- gated bythepresence ofcountries kets, thisproblem tendstobemiti- heavily concentratedonafewmar- world, ratherthanhavingitsexports trader, sellingtovirtuallythe whole tors. Moreover, asBrazil isaglobal problem thataffects alltradeindica- among theothers.However, thisisa and thusnotstandoutsomuch probably selllessthanitspotential, marketswill in majorinternational that issubjecttohighimporttariffs world. Averycompetitiveproduct of courseisnotthecaseinreal struments oftradedistortion,which quantitative restrictions andotherin- subsidies, discriminatorytariffs, ed byextraneousfactorssuchas sume thattradeflowsare notaffect- with acertaincaution,becauseitas- total worldtrade. participation ofthesameproducts in total exportsofonecountrywiththe ticipation ofspecificproducts inthe tool thatcompares therelative par- comparative advantage”,aanalytical study usedthe“indexofrevealed world ingeneral.To dothis,the most competitivewithrespect tothe identify products inwhichBrazilis Africa andIndia,thefirststepwasto opportunities forexportstoSouth Of these804mor In theperiod2001-2003Brazil This indicatormustbetreated In order toidentifyBrazil'sbest e competitive - India andSouthAfrica. was thenanalyzedseparatelyfor Brazilian exportsbyvalue.Thislist in SouthAfrica Spotting opportunities by thatcountryfrom anysource. that sevenitemswere notimported duced thestudylistto193,given Brazil's top200products. Thisre- whether SouthAfricadidinfactbuy 5.7%. market fortheseproducts was participation intheSouthAfrican 2003-2004, andBrazil'saverage US$5.7 billioninthebiennium of these193products averaged of items. appeared withasignificantnumber ical machineryandequipmentalso similar goods,electricalandmechan- and woodproducts, footwearand from thechemicalindustry, wood Organic chemicals,severalproducts 10% ofgoodswere from HS87). products were prominent (about the industrialsector, automotive by meatsandprepared foodstuffs. In agricultural (HSchapters1-24),led ported bySouthAfrica,only38were ed thelist.Of193products im- pearls, precious stones, zinc,andar- terials, leatherarticles, garments, resins and essentialoils,albuminma- salt, sulfur, stones,plaster, ores, tions, alcoholicspirits and beverages, preparations, vegetablepr melon, oilseedsand fruits,meat of products like citricfruitsand the countryisonlyaminorimporter cles, tractorsandaircraft. However, chinery andequipment,motorvehi- nickel, electricalandmechanicma- products, plastics,rubber, footwear, ganic chemicals,chemicalindustry gories ofmeats,soyresidues, inor- for variousproducts inthecate- The nextstepwastocheck Total SouthAfricanimportation Manufactured products dominat- South Africanisasizeablemarket epara- Zimbabwe. countries suchasMozambiqueand tralia, Malaysia,ThailandandAfrican United States,China,India,Aus- Other significantcompetitorsare the thanks toafree tradeagreement. cess totheSouthAfricanmarket recall thattheEUhasprivilegedac- South Africa,anditisimportantto are Brazil'smaincompetitorsin for another58.European countries products and isamongthetopthree Africa for26ofthe193selected Africa. apparently under-exploited inSouth global sales,butwhosepotentialis competitive, andhassubstantial 77 itemswhere Brazilisglobally products theyarrivedatablockof Thus, withinthose193competitive Brazil's participationwasbelow1%. of zero. Forafurther37products, words, theyhadmarketparticipation Africa inthelastbiennium.Inother were notexportedbyBraziltoSouth searchers identified40products that tial. represent enormousmarketpoten- is small,suggestingthattheydonot total valueofSouthAfricanimports about halfoftheseproducts, the ics andaluminum.However, for articles ofstoneandplaster, ceram- (kaolin), dentifrice,hidesandleather, soy oil,sugar, tobacco,whiteclay meat andvegetablepreparations, most relevant are meatproducts, ucts withintheselected193.The African importmarketfor40prod- ( ticles ofbasemetals. South African market A strategyfor the those products thatdemonstrate the tion andtradenegotiation efforts on best approach isfocus tradepromo- defined asover20%)oftheSouth Brazil isbiggestsuppliertoSouth At theotherendofscale,re- Brazil already hasahighshare The studysuggeststhat Brazil's

21 Ministry of External Relations 22

Ministry of External Relations in India Spotting opportunities products in2003/2004was US$5.01 value ofIndianimports ofthese192 advantage. Theaverage annual India where Brazilhas acomparative tified 192products importedby tailed above,theFuncex studyiden- es fewnon-tariff barriers. tariffs, althoughSouthAfricaimpos- ucts alsofacespecificorcomposite cotton fabricsat22%.Someprod- 25%, cathoderaytubesat25%and 30%, tires at32.5%,refrigerators at 40%, fruitsat35%,footwear ple meatsandmeatpreparations at are subjecttohightariffs, forexam- tive sector. Severalotherproducts particularly thosefrom theautomo- with 8digitsinthenomenclature, many oftheproducts whichappear while themaximumis42.5%for plied bySouthAfricais10.4%, parts andaircraft. equipment, motorvehicles,auto electric andmechanicalmotors footwear, metallurgicalproducts, wood andfurnituresector, paper, 87 products. Highlightsare the searchers arrivedataprioritylistof has penetrationof10%orless,re- South Africa,andwhere Braziltoday with asignificantmarketsizein tional share. it willprobably beeasiertowinaddi- rently lower(definedasunder 10%) each segment-where thisiscur- in investingtopromote sales;and u African marketforaparticularprod- those already discussed: to addtwoadditionalcriteria select thetargetproducts, itisuseful sion intheSouthAfricanmarket.To greatest potentialforexportexpan- ct -ifitissmall,there islesspoint Using aprocess similar tothatde- The averageadvalorem tariff ap- By focusingonlyonproducts -Brazil's current penetrationin -The overallsizeoftheSouth high participationinthoseimports. ket segment,andwhere Brazilhad share oftheirrespective Indianmar- where importsenjoyed asignificant and levelerswere theonlyproducts lion in2003/2004.Soyoil,iron ores nual importvaluesunderUS$5mil- low-volume segments,showingan- market share exceeding20%were in Brazilian products withanimport 10%-20% range.Mostofthe12 20%, withanotherseveninthe dian importmarketshare exceeding Brazilian products commandedanIn- very lowsalestoIndia. global comparativeadvantage,but tified 137itemswhere Brazilhasa shares ofzero, researchers thusiden- on the97itemsthathadimport r joyed shares of1%orlesstheir Brazil didinfactselltoIndia,42en- ment. considerable potentialforimprove- were not,suggestingthere maybe to Indiaduringthisperiod,and97 ucts were infactexportedbyBrazil However, only95ofthese192prod- share intheseimportswas4.1%. billion, andtheaverageBrazilian key sectors Under-performing in precious stones (71)andanimal ton (52),cellulose(47), plastics(39), cal equipment(85),aircraft (88),cot- mechanical equipment (84),electri- ters 72,75and76), machinesand from themetals categories(HSchap- products. Theyfoundseveral items ported from allsources for these counting for83.8%ofthetotalim- concentrated, with11chaptersac- ports oftheseitemswere highly 52 HSchapters.However, Indian im- and foundthemdistributedthrough gregated attheHStwo-digitlevel, same 192products usingdataag- espective importsegments.Adding At theotherendofscale,12 Of the95selectedproducts that Researchers thenanalyzedthe within thesechapters. portunities are probably located suggests thatBrazil'sbestexportop- the rest oftheworld.Thisinturn enjoys acomparativeadvantagein million ayearormore, andwhere it where Indianimportswere US$20 great majorityofthe23chapters pear tobeunder-performing inthe the 192products. share clearlyexceedtheaveragefor 26 didtheBrazilianimportmarket coffee (9).Onlyinchapters23and (48), automobiles(87),ores (26)and to leathersandhides(41),paper (chapters 73and74),oneeach two tothemetalproducts sector long tothechemical/rubbersectors, products. Fiveofthesechaptersbe- of totalIndianimportsthe192 in 12chapters,representing 13.4% million, researchers foundproducts tween US$20millionandUS$100 a's totalannualimportvaluelaybe- range marketsegmentswhere Indi- 192 selectedproducts. to theaveragemarketshare ofthe pation islow, evenwhencompared US$100 million/year, Brazil'spartici- import marketisgreater than jority ofthechapterswhere India's u above theaveragefor192prod- was theBrazilianaveragemarkedly world. Onlyinchapters15and75 share ofexportstotherest ofthe ports toIndiawaslowerthanits these chapters,Brazil'sshare ofex- vegetal fatsandoils(15).Ineightof Tariffs tween 30% and45%.Inother average tariff of25% and19be- There were 31products facingan affecting 110ofthe 192products. comparative advantage was30%, the 192products where Brazilhasa six-digit level)mostwidely appliedto cts. Thissuggeststhatforthema- In otherwords, Brazilwouldap- Analyzing theproducts inmid- The averageIndiantariff (atthe lose, incurred 5%. cluding iron ores, wood andcellu- craft paid3%andseven items,in- the listhadazero tariff, whileair- 100% orhigher. Onlyoneitemon and motorcycles faced tariffs of cluding coffee, sugar ethyl alcohol.Ten otherproducts in- on the192products was182%on tariffs of25%ormore. tive advantagefacedaverageIndian where Brazilholdsaglobalcompara- words, 160ofthe192products Brazilian poultry:winningnewmarketsaround theworld. Focusing specifically ontheprod- The highesttariff leviedbyIndia , automobiles (71) andiron, castiron and steel(72). plastics (chapter39), precious stones on the192products. Thesewere iffs relative tothatappliedbyIndia high valuesofimports andhightar- gence oflowBrazilian marketshare, three chapters wasthere aconver- age tariff of30% orhigher. Inonly US$100 millionayear-hadanaver- the firstgroup -importsover found thatfourofthe11chaptersin substantial imports,researchers parative advantageandIndiahas ucts wher In thesecond group, with im- e Brazilhasaglobalcom- (87). and steel(73)motorvehicles icals (36),paper(48),articlesofiron were coffee (chapter9),otherchem- for the192selectedproducts. These rates mostwidelyappliedbyIndia iffs thatwere highinrelation tothe substantial valueofimportsandtar- bined lowBrazilianmarket-share, a of 30%orhigher. Fiveofthemcom- seven chaptershadanaveragetariff ports ofUS$20--100millionayear, Global competition face global competition. Brazil's globallycompetitive products when itcomestoexporting toIndia, and Singapore (5). neighbors Indonesia(8), Thailand(6) 15. Othersegment leaderswere leading in17categories andJapan, were alsosignificantwithKorea countries oftheAsia-Pacificregion United Statesfor17.Developed 48 products, Chinafor25,andthe pean Unionwasthetopsupplierfor diversified supplyprofile. TheEuro- searchers foundthatIndiahasavery of particularinterest toBrazil,re- 2003/2004. US$4 millionayearinthebiennium these categoriesare small,below last item,however, Indianimportsin theexceptionof levelers. With ange oil,slate,ferro-niobium and of frozen orangejuice,essentialor- factured items. are increasingly significantinmanu- some EUmembers,ChinaandKorea Lanka. TheUnitedStates,Japan, Bangladesh, Singapore andSri bors Indonesia,Malaysia,Thailand, important, especiallyAsianneigh- developing countriesare relatively cultural products (exceptmeats)the developing countriesalike.Inagri- market comesfrom developedand Brazil's competitionintheIndian The inevitableconclusion isthat, Analyzing thelistof192products Brazil istheleadsuppliertoIndia

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