Brazil tries to improve trade relations with the UK

. Nov 12, 2020
trade brazil united kingdom Felixstowe docks, Suffolk, England. Photo: Martin Charles Hatch/Shutterstock

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Today, we cover Brazil and the UK’s efforts to enhance trade relations. Congressional paralysis in Brasília. And municipal elections heat up.

Brazil, UK push for a post-Brexit trade deal

Trade authorities in Brazil and the United Kingdom met online on Wednesday to discuss pathways to enhance

bilateral relations between the two countries, now that the United Kingdom is no longer a part of the European Union. “We must explore the possibility of negotiating a trade agreement,” said Roberto Fendt, the Brazilian Economy Ministry&#8217;s Trade Secretary, in a statement after meeting with British Trade Minister Liz Truss.</p> <p><strong>Why it matters.</strong> This rapprochement comes with the UK&#8217;s explicit support for Brazil&#8217;s entry to the Organization for Economic Cooperation and Development, one of the <a href="https://brazilian.report/business/2018/03/01/joining-oecd-mean-brazil/">key international goals</a> for the country since 2016.</p> <p><strong>Yes, but … </strong>Under the rules of Mercosur — Brazil&#8217;s trade union with Argentina, Paraguay, and Uruguay — any trade deal with another country must be signed by the entire bloc before it can be approved. Earlier this year, however, Argentina left the bloc&#8217;s trade negotiations, <a href="https://brazilian.report/latin-america/2020/04/25/argentina-exits-mercosur-negotiations-upending-trade-deals/">upending ongoing talks</a>.</p> <p><strong>Trade relations.</strong> Brazil-UK trade is by no means a centerpiece for either economy. The United Kingdom buys only 2 percent of Brazil&#8217;s exports, and figures have seen a downward trend over the past decade. Experts believe Brazil can benefit from the UK&#8217;s urgency in passing multiple trade agreements to show post-Brexit results — but the country&#8217;s economy is one of the most restrictive in Latin America.</p> <ul><li>Some sectors follow discussions very closely, such as the food and beverage industry. Half of everything from that sector that is consumed in the United Kingdom is imported, and 60 percent of those imports come from EU countries. Tighter trade relations could be highly valuable to Brazil&#8217;s agribusiness sector.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4325853"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>&#8220;Big Center&#8221; promises to unclog Congress&#8217; agenda</h2> <p>It has been over a month since Brazilian lawmakers last voted on a bill in the lower house, as parties continue to feud over the control of congressional committees —&nbsp;especially the Budget Committee, formed by both senators and representatives (<a href="https://brazilian.report/newsletters/brazil-daily/2020/10/30/squabbles-over-2021-budget-could-throw-brazil-into-shutdown/">we explained this feud in detail on October 30</a>).&nbsp;</p> <p><strong>Why it matters. </strong>Without approving a budget — or even the legislation setting the government&#8217;s budgetary priorities for 2021 — Brazil is on serious shutdown alert. Earlier this week, Speaker Rodrigo Maia said that unless the agenda is cleared, the country will &#8220;explode in January.&#8221; He added: &#8220;The U.S. Dollar will reach BRL 7, long-term interest rates will skyrocket, and hyperinflation is a possibility.&#8221;</p> <p><strong>Solution on the horizon? </strong>On Wednesday, the government&#8217;s whip in the House, Congressman Rodrigo Barros, said a deal has been reached with the so-called &#8220;<a href="https://brazilian.report/opinion/2018/07/31/brazil-big-center-2018-president/">Big Center</a>&#8221; (an amalgam of ideology-free groups), and some priority bills could be voted in the two weeks following the municipal elections.</p> <ul><li>The list includes a bill unfreezing funds to be spent on anti-coronavirus efforts, a financial recovery plan for states, a bill to regulate cabotage, housing projects, and one to establish the formal autonomy of the Central Bank.</li></ul> <p><strong>Cash transfers.</strong> One major proposal, however, is not expected to make the cut. Lawmakers have yet to agree on a welfare program to replace the coronavirus emergency salary. The government has stalled in presenting a proposal, despite the fact that President Jair Bolsonaro publicly backs the idea. Economists fear that the <a href="https://brazilian.report/power/2020/08/20/what-happens-when-brazils-coronavirus-emergency-aid-ends/">abrupt end</a> of the aid program could <a href="https://brazilian.report/podcast/2020/07/01/explaining-brazil-podcast-violent-effects-of-brazil-job-apocalypse/">see poverty rates skyrocket</a>.</p> <hr class="wp-block-separator"/> <h2>Election Roundup: the state of the race</h2> <p>With the campaign reaching its final moments, we bring you the main highlights of local races across the country:</p> <ul><li><strong>Misinformation.</strong> A massive wave of social media posts containing falsehoods about Brazil&#8217;s electoral system has been detected by experts who study misinformation. They fear that this effort to discredit the system may impact vote turnout and fuel battles by candidates who lost the vote. As our Explaining Brazil podcast showed in June, <a href="https://brazilian.report/podcast/2020/06/18/covid-19-pandemic-brazilian-elections-more-exposed-fake-news/">Covid-19 made Brazilian elections more exposed to fake news</a>.</li><li><strong>Amapá. </strong>The Superior Electoral Court has ruled to suspend the municipal elections in the state of Amapá — where all but two municipalities have been <a href="https://brazilian.report/society/2020/11/10/cut-off-amapa-state-endures-a-week-without-electricity/">without electricity</a> for over a week. The outages have disrupted people&#8217;s access to drinking water, internet connections, and phone services — sparking protests. Authorities deemed it too risky to hold an election in such conditions, but have yet to set a new date.</li><li><strong>São Paulo.</strong> Incumbent Bruno Covas has increased his lead and polls at 32 percent. Meanwhile, left-wing activist Guilherme Boulos has jumped to second position, being the only member of the chasing pack to increase his numbers. However, Workers&#8217; Party candidate Jilmar Tatto (who is <a href="https://brazilian.report/power/2020/11/09/municipal-elections-highlight-challenges-facing-brazils-left-wing/">polling at only 4 percent</a>) has resisted the idea of stepping down and asking his supporters to vote for Mr. Boulos instead.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4258791"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <ul id="block-b1026887-3644-417d-994a-e85a9b072a43"><li><strong>Rio.</strong> Few major races have been as constant as Rio&#8217;s. Former Mayor Eduardo Paes is poised for a return to City Hall, four years after being replaced by incumbent Marcelo Crivella — who is rejected by two-thirds of voters and polling far behind.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4325138"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <ul><li><strong>Recife.</strong> In what is a battle of traditional political clans, this Northeastern race remains open-ended. João Campos, the son of late Governor Eduardo Campos, has been consistently polling in first, but a pulverized election prevents any prognostics for who he will face in the second round.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4325605"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Vaccine 1. </strong>On Wednesday, federal health regulator Anvisa allowed the resumption of clinical trials for the CoronaVac, a Chinese-made potential Covid-19 vaccine developed by Sinovac Biotech, in partnership with the São Paulo-based Butantan Biological Institute. Trials had been <a href="https://brazilian.report/newsletters/brazil-daily/2020/11/10/brazilian-regulators-suspend-chinese-vaccine-trials/">suspended</a> after an alleged &#8220;severe adverse event&#8221; — but the death of a study volunteer had been ruled a suicide and thus not connected to the vaccine. Despite a history of <a href="https://brazilian.report/podcast/2020/10/21/podcast-electoral-calculations-around-covid-19-vaccine/">negative statements around CoronaVac</a>, President Jair Bolsonaro said on Wednesday the government would purchase whatever vaccine is greenlit by regulators.</li><li><strong>Vaccine 2.</strong> Meanwhile, Brazil&#8217;s Oswaldo Cruz Foundation is working on two potential vaccines that would use <a href="https://www.poder360.com.br/coronavirus/covid-19-vacina-propria-da-fiocruz-pode-ter-testes-clinicos-em-2021/">100-percent Brazilian technology</a>. These projects presented positive results in animal tests and could reach the stage of human clinical trials by next year, potentially allowing them to be made available in 2022. Authorities say the development of a national vaccine could be pivotal in supplying the entire population with immunization, a goal difficult to achieve with foreign-made vaccines.</li><li><strong>Coronavirus.</strong> Private hospitals in São Paulo registered a spike in admittance of severe Covid-19 patients in October. In flagship facilities, new hospitalizations reached levels similar to the ones seen in April and May — when the spread of the coronavirus was uncontrolled in the country. When commenting on a possible second wave of infections, President Jair Bolsonaro said the problem could be solved with &#8220;early treatments,&#8221; citing <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/05/16/chloroquine-unites-bolsonaro-and-venezuelas-nicolas-maduro/">unproven drugs</a> as a solution.</li><li><strong>Violence.</strong> Justice Minister André Mendonça will call a meeting with state security chiefs to discuss solutions for the spike in homicides across the country (up 7 percent in H1 2020). He is expected to propose specific task forces in violence hot spots.</li><li><strong>Gunpowder.</strong> President Jair Bolsonaro has reportedly admitted to allies that he &#8220;exaggerated&#8221; when threatening to <a href="https://brazilian.report/newsletters/brazil-daily/2020/11/11/in-one-day-bolsonaro-hits-out-at-both-china-and-biden/">use &#8220;gunpowder&#8221; against the U.S.</a>, were President-elect Joe Biden to interfere with the country&#8217;s environmental policies. Publicly, Vice President Hamilton Mourão called the phrase a &#8220;figure of speech.&#8221; Mr. Bolsonaro&#8217;s threats were met with ridicule in Brazil, given that the country <a href="https://internacional.estadao.com.br/noticias/geral,em-numeros-comparacoes-entre-o-poderio-militar-dos-eua-e-brasil,70003510248?utm_source=meio&amp;utm_medium=email">spends 27 times less</a> on defense than the U.S. — the world&#8217;s biggest military power.</li><li><strong>Deforestation.</strong> Speaking of environmental policies, opposition parties and NGOs are going to the Supreme Court to force the government to resume the federal Amazon Deforestation Prevention Plan (PPCDAM), abandoned since last year. The plan called for a 60-percent reduction in deforestation rates — but wildfires are reaching record highs both in the Amazon rainforest and the <a href="https://brazilian.report/environment/2020/07/28/brazil-pantanal-wetland-in-flames-during-harsh-drought/">Pantanal wetlands</a>.

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