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Blanked by Brazil, Argentina turning to China for trade

. Jun 10, 2020
Blanked by Brazil, Argentina turning to China for trade Buenos Aires street. Photo: shu2260/Shutterstock

Beyond ideological supporters and the “anti-politics” vote, a significant portion of those who elected Jair Bolsonaro president in 2018 did so with an eye on the economy. During the campaign, the former Army captain declared he knew “nothing about economics” and the appointed ultra-liberal Paulo Guedes as his future czar for all things finance. With supporters of free trade and liberal economics firmly on board, Mr. Guedes set his stall out early, saying that South American trade bloc Mercosur (which also includes Argentina, Paraguay, and Uruguay) wouldn’t be a priority during his tenure and that “doing business with ideology” — a veiled dig at China — had its days numbered.

</p> <p>This came as quite the break with tradition, as China and Argentina are among Brazil&#8217;s top three trading partners. According to think tank Fundação Getulio Vargas, almost <a href="https://brazilian.report/opinion/2019/10/24/china-necessity-bolsonaro-brazil-not-choice/">30 percent of Brazilian exports in 2019</a> went to China. But while Brazil broke monthly records of exports to China this year, even during the pandemic, the country&#8217;s relationship with Argentina has soured dramatically. Now, China has surpassed Brazil as Argentina&#8217;s biggest trade partner.</p> <p>According to the Argentinian Ministry of Productive Development, total trade with Brazil plunged 55.6 percent in May, compared to the same month last year. Buenos Aires news website <a href="https://www.infobae.com/economia/2020/06/06/por-que-china-podria-desplazar-este-ano-a-brasil-como-principal-socio-comercial-de-la-argentina/">Infobae</a> says the trend is likely to last longer than a month.&nbsp;</p> <p>Simultaneously, China has ramped up its purchases of Argentinian commodities, with soybeans and beef increasing 52 and 29 percent, respectively. And that’s only the beginning. In the words of the Chinese ambassador in Buenos Aires, Zou Xiaolli, Beijing’s <a href="https://www.ambito.com/economia/china/zou-xiaoli-la-demanda-productos-calidad-volvera-crecer-n5102385">“demand for quality products will grow again</a>.”</p> <div class="flourish-embed flourish-hierarchy" data-src="visualisation/2793448" data-url="https://flo.uri.sh/visualisation/2793448/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <div class="flourish-embed flourish-hierarchy" data-src="visualisation/2793713" data-url="https://flo.uri.sh/visualisation/2793713/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p>Is this trend simply based on China&#8217;s voracious appetite for inputs? Miguel Ponce, Argentina’s former deputy secretary of industry and commerce, says no. In his view, recent developments also have a political edge.</p> <p>“China is finding permanent opportunities to grow. Take trade between China and Australia, for example. Australia asked the World Health Organization (WHO) to <a href="https://www.abc.net.au/news/2020-06-07/australia-china-racism-coronavirus-how-did-relationship-get-here/12330250">investigate China</a> for the coronavirus outbreak. What did China do? It stopped buying barley and meat from Australia. Now Argentina is preparing to be a substitute market and take Australia&#8217;s place,” Mr. Ponce told <strong>The Brazilian Report</strong>.&nbsp;</p> <p>This could also be a warning to Brazil. As <a href="https://brazilian.report/power/2020/05/29/why-has-taiwan-become-a-brazilian-far-right-symbol/">reported in May</a>, several members of the Bolsonaro government have repeated <a href="https://brazilian.report/power/2020/05/29/why-has-taiwan-become-a-brazilian-far-right-symbol/">conspiratorial messages against China</a>. So far, that rhetoric has not affected how Beijing does business with Brazil, but if it does, it could cause a cataclysmic episode in an economy already tipped by the <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/06/08/brazilian-gdp-projections-slashed-for-17th-week-in-a-row/">World Bank</a> to fall 8 percent in 2020.&nbsp;</p> <p>“It is a delicate situation. Argentina fears, for example, that this new Chinese position will generate retaliation for Brazil. We must remember that Brazil ‘punished’ us by <a href="https://www1.folha.uol.com.br/mercado/2019/03/argentina-critica-acordo-entre-brasil-e-eua-para-trigo.shtml">buying wheat from the U.S</a>. in 2019. This kind of intrigue cannot happen now, especially during the pandemic. We don&#8217;t need less Mercosur. We need <em>more</em> Mercosur to overcome this adversity. That’s the motto in Buenos Aires nowadays,” he added.&nbsp;</p> <div id="buzzsprout-player-1079105"></div> <script src="https://www.buzzsprout.com/299876/1079105-12-brazil-and-mercosur.js?container_id=buzzsprout-player-1079105&#038;player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>Multilateralism is the only way</h2> <p>Brazil under Jair Bolsonaro is a daily machine of global discord, led largely by anti-globalist <a href="https://brazilian.report/power/2020/06/03/brazil-foreign-minister-ernesto-araujo-president-bolsonaro/">Foreign Affairs Minister Ernesto Araújo</a>. Argentina, meanwhile, goes in the opposite direction. As Brazil antagonizes China, the administration of President Alberto Fernández preaches that “relations must be de-ideologized,” a view shared by his Foreign Affairs Minister Felipe Solá. Unlike Paulo Guedes, he means it. In February, Mr. Solá even <a href="https://brazilian.report/latin-america/2020/02/12/argentina-brazil-trade-felipe-sola-visit-brasilia/">went to Brasília</a> to re-establish relations with their neighbors.&nbsp;</p> <p>“Mr. Solá&#8217;s message is important. We must not only de-ideologize trade issues. We must stop thinking only about the post-crisis and also think about what we can do during the crisis. It is necessary to work together and take advantage of the opportunities that arise, as in the case of Argentina and the China-Australia problem. Brazil must be an ally of Argentina, to also take advantage of the opportunities that emerge from China&#8217;s trade war [with the U.S.].”</p> <p>Meanwhile, multilateralism is something Brazil appears to be ignoring. Last week, the Netherlands was the third European Union member state to reject the <a href="https://brazilian.report/podcast/2019/07/03/mercosur-eu-trade-deal-explained/">Mercosur-EU</a> trade deal, due to Brazil’s inactivity in curbing Amazon deforestation. If Brazil doesn&#8217;t change tack and make concessions, the historical agreement — the fruit of 20 years of negotiations — will have been for nothing.

 
Lucas Berti

Lucas Berti covers international affairs—specializing Latin American politics and markets. He has been published by Opera Mundi, Revista VIP, and The Intercept Brasil, among others.

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