South-South trade ties firm up

The trade ties with the Mercosur trade pact countries of South America – Argentina, Brazil, Paraguay and Uruguay – have just been further firmed, according to André Erasmus, senior manager of trade consultants, Deloitte. In making this assumption, Erasmus cited president Jacob Zuma’s recent state visit to Brazil – by far the largest member of the pact, and already a major trading partner of SA. This Brazilian national muscle was pointed out to FTW by Willemien Denner, a researcher at the Trade Law Centre of Southern Africa, who highlighted a number of SA-Brazil trade statistics. • The value of SA’s total imports from Brazil has increased by 2% from 2007- 2008, and, in December 2008, the total value of imports was approximately US$1.6-billion; • SA’s exports to Brazil for 2008 represented only 1% of its total world exports – however, SA exports to Brazil grew by 26% in 2007-2008; • The top ten products, in terms of Brazilian imports, represented 59% of the total SA imports from Brazil – with the top product sectors being imports of returned exports (24%); followed by live animals and animal products (9%); animal or vegetable fats and oils (8%); machinery (3%) and food, beverages and tobacco (3%). • The top ten SA products exported to Brazil represented 64% of SA’s total exports to that country – with the top five product sectors being base metals (19%); mineral products (16%); machinery (9%); chemical products (5%) and plastic products (4%). Denner added that, although SA currently only exported a limited amount of its total exports to the Latin America region, exports to most of these countries, including Brazil, Argentina and Chile, had grown over the past few years. And, he reckoned, as South-South trade became increasingly important, Brazil had the potential to provide SA businesses with investment and export opportunities. The latest move boosting SA-Brazil and SA-Mercosur trade relations, said Erasmus, was that, during his visit, Zuma and Brazilian president Lula Da Silva witnessed the signing of a memorandum of understanding (MoU) between the Brazilian ministry of development, industry and foreign trade and the SA department of trade and industry (dti) for the promotion of trade and investment. He agreed that the MoU would see the development of an implementation plan that would focus on how trade and investment initiatives would be structured to benefit both countries. Denner said, since the 1990s, Brazil and SA had gained prominence in international relations. “This,” he said, “is attributed to the regional importance of the Brazilian and SA economies and increased financial and commercial liberalisation programmes. Trade between SA and Latin America has also grown significantly over the last few years, with Brazil currently being our largest trading partner in the region.” At the SA-Brazil Roundtable Business Forum – where the SA delegation included representatives of 45 companies which are interested in expanding trade and investment with Brazil in the areas of energy, mining, finance, infrastructure and pharmaceuticals – the president emphasised that SA had mainly focused its exports on raw materials to Europe and North America. “But,” Denner added, “Zuma said SA aimed to find partners among the powerhouse economies of the South.” He said the dti had also identified the Latin American region as a destination for SA’s exports and had commissioned a study on the opportunities for increasing trade. An important preliminary finding of the study is that the export potential to Argentina, Brazil, Chile, Mexico and Venezuela is estimated to be US$200- billion. “According to President Zuma,” he added, “the global economic crisis has shown the need for the reconfiguration of the global economy. The development of South-South relations must be at the centre of this change. “Countries like Brazil and China have been leading the shift in the global economic relations, contributing to the rapid growth of the share of developing countries in world trade.”