Agreements with Asia could threaten jobs in Brazil – CNI

RIO DE JANEIRO, BRAZIL – Trade agreements with South Korea, Indonesia and Vietnam may increase Brazil’s trade deficit with these countries by US$12.8 billion per year, according to a statement issued by the National Confederation of Industry (CNI).

According to the industry association, these agreements may lead to a drop in employment and production in up to 21 industry sectors, namely electronic products, electrical equipment, machinery and equipment, vehicles and auto parts, textiles, clothing and leather products.

The position is in line with the complaint voiced earlier by the executive-president of the Brazilian Electrical and Electronics Industry Association (ABINEE), Humberto Barbato, over breakfast with Economy Minister Paulo Guedes and industrial entrepreneurs.

Barbato argued that Brazil should prioritize agreements with countries and blocs where it is in a better position to export industrialized products. As a reply, Guedes said he had taken note that ideally the United States and Canada should be prioritized.

CNI also assesses that agreements with these Asian countries will not contribute to increase the quality of trade integration, because these partners basically buy primary products.

Another point raised is the difference in Brazilian labor standards and those of these countries. While Brazil has 99 agreements ratified in the International Labor Organization (ILO), South Korea has ratified 29, Vietnam, 24, and Indonesia, 20 agreements, CNI reports.

In Indonesia and Vietnam, minimum wage corresponds to nearly 15% of the floor in Brazil, the organization adds. Therefore, it assesses, unfair competition could be created.

A recent study prepared by the Ministry of Economy pointed to the benefits of agreements with Asian countries. Meat and food products, transport equipment and chemicals are among the products with the greatest profit potential, according to the Ministry.

These countries are part of agreements such as the Comprehensive and Progressive Transpacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

Brazil is not part of these agreements, so the strategy is to negotiate agreements individually with partners. This should ease access of Brazilian products to the region.

Asia is the most dynamic and fastest economically developing area in the world. The Ministry of Economy believes that the region must be necessarily taken into account in foreign trade strategies.

Source: Valor