Last month, U.S. President Donald Trump criticized Brazil, claiming it was one of the most difficult countries to have trade relations with. Trump further insisted that American companies receive unfair treatment in Brazil.
However, the United States and Brazil have more in common than Trump suggests. For example, both countries impose strict trade barriers and apply high taxes on their meat, juice, ethanol and sugar products. But that is where the comparison ends.
Despite its robust agribusiness exports, according to a World Bank report, Brazilian exports are only about half of that of countries such as Russia and Chile and only a third of Mexico's exports. Compounding the issue is Brazil's high import tariffs. The average tariff on imports to Brazil is 8.8 percent as compared to 0.6 percent for Chile and 1.6 percent for the U.S.
In 2017, before a G-20 meeting, Brazil's Finance Minister, Henrique Meirelles, expressed how a more open economy would greatly benefit Brazil. During the period where the Worker's Party was in power (2003-2016) under President Lula and his successor Dilma Rousseff, Brazil practiced a closed-door policy, alienating foreign investment and increasing the control of the state over the country's economy. President Michel Temer, who became president following Rousseff's impeachment, focused part of his economic policy on re-opening those doors, including reducing bureaucracy and taxes for foreign companies wishing to open businesses in Brazil.
Finance Minister Meirelles confirmed this in his statement last year: "This government has adopted a clearly pro-market, free-market approach. As a result, investors are feeling more confident, are coming back to take advantage."
During the period of January to September of this year, Brazilian agricultural exports to the U.S. reached US$3.1 billion. The U.S. sold agricultural products to Brazil in the amount of US$2.1 billion during the same period.
However, Brazil still remains a difficult country for foreign investments, especially compared to other South American countries. Colombia, for example, has economic policies that openly entice foreign business. With Sunday's presidential elections, it will be interesting to see what direction Brazil's economy takes next.
