Brazil puts stamp of 'market' on
China By Mario Osava
RIO DE
JANEIRO - Brazilian President Luiz Inacio Lula da Silva,
in keeping with his well-known pragmatism, decided to
recognize China as a market economy, when he met with
Chinese President Hu Jintao in the Brazilian capital. In
exchange for that concession, Brazil is signing 10
agreements with China that will strengthen bilateral
trade, mainly in favor of Brazilian agri-business, and
provide a strong boost to Chinese investment and tourism
in Brazil.
China joined the World Trade
Organization (WTO) in 2001, but as a "non-market"
economy, which makes its exports more vulnerable to
trade barriers and anti-dumping measures in other
countries. However, more than 20 countries have agreed
to regard it as a market economy, including Australia.
Market economy status is supposed to mean that market
forces, not a dominant central planning, are really at
work. planmnom
President Lula said Brazil's
"strategic partnership" with China is top priority for
his government and that bilateral trade should double to
US$20 billion by 2007. Brazil wants to export more beef,
chicken, minerals, fruit and juice to China, "as well as
products with greater value added", Lula said Friday.
Brazil's minister of development, industry and
foreign trade, Luiz Fernando Furlan, said government
accords and private sector business deals between the
two countries clinched during this week's visit by the
Chinese delegation should lead to an increase in Chinese
investment in Brazil to $10 billion over the next two
years.
Brazil has been made an official tourism
destination by China, which could bring the number of
Chinese visitors up from the current 15,000 a year to as
many as 100,000 by 2007 - an inflow of tourists that
would represent $250 million in revenues, according to
Brazil's tourism ministry. An estimated 22 million
Chinese travel abroad every year, a figure that could
rise to 100 million by 2020, says the WTO.
Gaining Brazil's recognition of its "socialist
market economy" was China's main exigency during the
current official visit by President Hu Jintao, who was
accompanied by 240 government officials and business
leaders. Furlan said he was "bombarded" with that market
economy request "28 times" in the meetings he held
Wednesday and Thursday with Chinese deputy minister of
trade Ma Xiuhong.
Brazilian ministers and
diplomats had stated that China is not technically a
full market economy, and Furlan said the recognition of
it as such would only be granted as part of a "balanced"
negotiation. The decision fell to President Lula, who
argued - according to Furlan - that a truly free market
is not even seen in the rich countries that advocate it,
like the United States, which distort trade with
different barriers like farm subsidies.
Brazil's
decision is of immense political importance to China, in
its desire to gain the same recognition from other
countries. Brazil, with a population of 180 million, was
the first giant country to take the step. Furlan made
haste to calm the Brazilian business community, giving
assurances that Brazil was not renouncing tools like
anti-dumping measures in the case of China.
But
with Friday's decision, Brazil loses the possibility of
adopting unilateral safeguards and other measures to
defend local industry and must follow WTO rules, which
provide for lengthy procedures when one member nation
files a complaint against another. In the 1990s, the
Brazilian umbrella industry was decimated by the influx
of Chinese umbrellas, most of which were smuggled in,
and the country was forced to adopt safeguards to
protect its toy industry from a flood of cheap Chinese
products.
These and other manufacturing sectors
like the footwear and garment industries are fearful of
greater opening to competition from China, which can
offer merchandise at much more economical prices due to
low labor costs. Contraband Chinese merchandise is
another major threat. Forza Sindical, Brazil's second
largest trade union confederation, held a demonstration
in Brasilia Thursday to protest "piracy", referring to
the illegal entry of false brand-name goods produced in
China and other Asian countries, most of which are
smuggled in through Paraguay.
Brazil and China
signed agreements Friday in Brasilia that will
facilitate the export of Brazilian beef and chicken to
China, settling prior disagreements over health
regulations. Another agreement involved the sale of
Brazilian aircraft and parts to the Asian giant. In the
technology sector, the two countries have decided to
jointly build a fourth satellite, to be launched in
2006, and sell the images generated to third parties.
But one of the most decisive aspects in the
"strategic alliance" between the two countries is
Chinese investment in Brazil. The fact that the South
American country still possesses an abundance of natural
resources, while China's are being rapidly depleted by
its dizzying economic growth, offers significant
potential for mutually complementary cooperation.
China plans to lease land in Brazil to produce
food and raw materials for its own population, and much
of its investment will be devoted to transportation
infrastructure, to ensure a consistent supply. Mining,
iron and steel, energy and biotechnology will be other
key areas of bilateral cooperation. China will continue
to seek closer ties with Brazil and the rest of Latin
America, President Hu pledged in the Brazilian Congress,
where he was received as an honored guest.
"This
will be the century of the Pacific and Latin America,"
he declared, noting that trade between his country and
this region grew six-fold between 1993 and 2003, and
doubled in the last three years, with signs of
increasing even further in the future. Jintao also
pointed out that his country's GDP has reached $1.4
trillion, 10 times more than in 1978. China is now the
world's sixth largest economy, although it is ranked in
110th place in terms of per capita GDP.
Brazil
was the Chinese leader's first stop on a 12-day tour of
four Latin American countries, which will also take him
to Argentina, Chile and Cuba.
