Opinion – Rodrigo Tavares: Why is trade between Brazil and Portugal not growing?

A few months after the 2002 presidential election, the then Prime Minister of Portugal Durão Barroso visited Brazil and defended the need to strengthen economic and trade relations, as well as friendship ties. Eight months later, with the crown of president, Lula landed in Portugal with a delegation of 60 businessmen from different sectors.

This choreography is recurring. For at least half a century, the two countries have alternated in initiatives to promote bilateral trade. Trade agreements are signed. Heads of government release the celebratory verb. Confederations, federations and trade associations spring up. Hundreds of visits, seminars and business events are organised.

The ballet is perpetuated from dome to dome, going through processes of weakening and strengthening to preserve itself. Even without an audience or applause, he resists.

The trade flow between the two countries is limited and almost invariable. In the last decade, which coincided with the explosion of Brazilian interest in Portugal, Brazilian exports rose from US$ 2.1 billion (in 2011) to just US$ 2.6 billion (in 2021), the average for this period of US$ 1.4 billion. Only 0.9% of Brazilian exports are destined for Portugal (data from the MDIC).

The same trend can be seen in imports, which reached US$ 840 million in 2011 and US$ 857 million in 2021. Portugal accounts for only 0.4% of Brazilian imports.

It is true that between the end of 2021 and the first half of 2022 there was a significant growth in Brazilian exports, but it is only due to the increase in oil sales, a circumstantial phenomenon.

In the luminous book “Arrancados da Terra”, by Lira Neto, it is read that the Companhia Geral do Comércio do Brasil, created in 1649 during the reign of João 4º de Portugal, held the “exclusivity in the export of typically Portuguese products, such as olive oil, wine, cereals and cod”. Since then Brazil has changed. Portugal too. But Portuguese exports are still based on the same products.

Among the five most exported by Portugal to Brazil are olive oil (1st), wine (3rd) and cod (4th). Sérgio Buarque de Holanda wrote that between the two countries there is a “powerful unifying substrate”. At least in commerce, the perpetuation of the same axis is indeed a case study.

The reasons are perhaps not difficult to infer.

Brazil, with many natural resources and a strong domestic market, is the most closed country in the world, in relation to all comparable countries, in the area of ​​trade. While Belgium, for example, trades 130% of its GDP (and Portugal, 85%), the sum of exports and imports in Brazil is equivalent to only 24% of GDP. In the whole world it is not second only to Sudan and Nigeria.

It is a legacy of the tariff protectionism and state interventionism of the military dictatorship. Currently, this agenda of monopolizing the domestic market is led by the largest Brazilian companies – all of them campaign donors and with influence in Planalto and Bandeirantes.

Even so, several countries have managed to overcome the obstacles. Among European nations of comparable size, Brazil imports more from Sweden, Austria, Switzerland or Belgium than from Portugal.

Another difficulty: Portuguese businessmen suffer from a Jocasta complex, a character from Greek mythology who had an obsessive desire for her son. They are affected by a predisposition to believe that language and culture are common and that, therefore, there is a historical relationship that generates a balance of positive expectations. Believing that they are starting from an advantageous competitive position, it is difficult for them to repress the impulse towards big ambition and little haughtiness.

But practice proves otherwise. The Brazilian business community is very competitive and sophisticated and does not welcome foreigners with open arms, despite the always hospitable and fraternal atmosphere. As the lyrics of the first Brazilian anthem of 1831 say, “Barbaric men / born of Jewish and Moorish blood / be disillusioned: the homeland / is no longer your treasure”.

In addition, many Portuguese businessmen are unaware of their level of ignorance about Brazil, a thorny, sensitive and steep country from the tax, logistical, political and legal point of view. Among 190 countries, it is the 124th most difficult to do business (World Bank data).

Speaking to the column, a senior official from Aicep (the Agency for Investment and Foreign Trade of Portugal), with a deep knowledge of the Brazilian reality, also warns of other particularities, such as the rigidity of the labor market, the inefficient and precarious infrastructure or the complexity and diversity of licenses and registrations with institutions such as Anvisa, Ministry of Agriculture or Inmetro.

To help overcome these structural and cultural problems, public support infrastructure was expected to be robust. But they are not. The embassies and consulates of Portugal and Brazil, together with the delegations of Aicep and ApexBrasil, have a limited and analogical performance, when compared to other countries of similar size.

With just a few weeks to go before we celebrate 200 years of Brazil’s independence, we need to think creatively about barriers to bilateral trade. The president of Portugal must have had many opportunities to reflect on the matter. Since taking power in 2016, he has visited Brazil an astonishing five times, having already confirmed a new visit for September. A record. But the pleasantries have not been reciprocated.

In the same period, no Brazilian president made an official visit to Portugal. Only Michel Temer (MDB), twice, spent a few hours in Lisbon, in 2017. Another record.

But on the 7th of September, the speech by the President of Portugal will celebrate the eternal bonds of fraternal friendship between the two countries. And, like all his predecessors, he will defend the need to strengthen bilateral trade.