Opinion: Why doesn’t trade between Brazil and Portugal grow?

By Rodrigo Tavares

A few months after the presidential election of 2002, the then Prime Minister of Portugal, Durão Barroso, visited Brazil and defended the need to strengthen economic and commercial relations and friendship ties.

Eight months later, already wearing the presidential crown, Lula da Silva arrived in Portugal with a delegation of 60 business people from various sectors.

This choreography is recurrent. The two countries have alternated initiatives to promote bilateral trade for at least half a century. Commercial agreements are signed. Heads of government release the celebratory verb. Confederations, federations, and trade associations spring up. Hundreds of visits, seminars, and business events are organized.

The dance goes on and on from summit to summit. Even without an audience or applause, it endures.

The commercial flow between the two countries is limited and almost invariable. In the last decade, which coincided with the explosion of interest of Brazilians in Portugal, Brazilian exports went from US$2.1 billion (in 2011) to only US$2.6 billion (in 2021), with the average for this period being US$1.4 billion. Only 0.9% of Brazilian exports are destined for Portugal (MDIC data).

The same trend can be seen in imports, which reached US$840 million in 2011 and US$857 million in 2021. Portugal accounts for only 0.4% of Brazilian imports.

It is true that between the end of 2021 and the first half of 2022, there was significant growth in Brazilian exports, but it is only due to the increase in oil sales, a circumstantial phenomenon.

One reads in the brilliant book “Ripped from the Earth” by Lira Neto that Brazil’s General Company of Commerce, created in 1649 during the reign of Portugal’s João the 4th, had the “exclusive right to export typically Portuguese products, such as olive oil, wine, cereals, and codfish”. Since then, Brazil has changed. So has Portugal. But Portuguese exports are still based on the same products.

Among the five most exported products by Portugal to Brazil, olive oil (1st), wine (3rd), and codfish (4th) are still the most important.

Sérgio Buarque de Holanda wrote that “a powerful unifying substratum” exists between the two countries. At least in trade, the perpetuation of the same axis is indeed a case study.

The reasons are perhaps not difficult to infer.

Brazil, with many natural resources and a robust domestic market, is the most closed country in the world, relative to all comparable countries, in the trade area. While Belgium, for example, trades 130% of its GDP (and Portugal 85%), the sum of exports and imports in Brazil amounts to only 24% of GDP. In the whole world, it is only second only to Sudan and Nigeria.

It is a legacy of the military dictatorship’s tariff protectionism and state interventionism. Today, this agenda of monopolizing the internal market is led by the most prominent Brazilian companies – all of them campaign donors and with influence in the federal and São Paulo state administrations.

Even so, several countries have managed to overcome the obstacles. Among European nations of comparable size, Brazil imports more from Sweden, Austria, Switzerland, or Belgium than from Portugal.

Another difficulty: Portuguese business people suffer from the Jocasta complex, the character from Greek mythology who had an obsessive desire for her son.

They are affected by a predisposition to believe that language and culture are common and that there is a historical relationship that generates a balance of positive expectations.

Believing they start from an advantageous competitive position, it is difficult for them to repress the impulse toward great ambition and petty haughtiness.

But practice proves otherwise. The Brazilian business community is very competitive and sophisticated and does not welcome outsiders with open arms, despite the always hospitable and fraternal atmosphere.

Furthermore, many Portuguese business people are unaware of their level of unfamiliarity with Brazil, a thorny, sensitive, and steep country from a tax, logistical, political, and legal point of view. Among 190 countries, it is the 124th most challenging to do business in (World Bank data).

In statements to the column, a senior official from Aicep (the Portuguese Agency for Investment and Foreign Trade), with deep knowledge of the Brazilian reality, also alerts to other particularities, such as the rigidity of the labor market, the inefficient and precarious infrastructure or the complexity and diversity of licenses and registrations with institutions such as Anvisa, the Ministry of Agriculture, or Inmetro.

To help overcome these structural and cultural problems, it was expected that the supporting public infrastructure would be robust. But they are not. The embassies and consulates of Portugal and Brazil, along with the delegations of Aicep and ApexBrasil, have limited and analogical performance compared to other countries of similar size.

A few weeks before we celebrate the 200th anniversary of Brazil’s independence, we need to think creatively about the barriers to bilateral trade. Portugal’s president must have had many opportunities to reflect on the matter.

Since taking office in 2016, he has visited Brazil an astonishing five times, having already confirmed a new visit for September. A record. But the pleasantries have not been reciprocated.

In the same period, no Brazilian president made an official visit to Portugal. Only Michel Temer (MDB) twice spent a few hours in Lisbon in 2017. Another record.

But on September 7, the President of Portugal’s speech will celebrate the eternal bonds of fraternal friendship between the two countries. And, as all his predecessors did, he will defend the need to strengthen bilateral trade.

With information from Folha de S.Paulo