Brazil steps up efforts to engage UAE in free trade talks

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• Brazil’s exports to the Emirates rose 40% in 2022 to hit $3.3bn
• A South American bloc made a free trade deal with Egypt in 2017
• Latin America’s largest economy is looking for closer ties with the Gulf

Brazil is keen to progress free trade negotiations with the UAE, a business leader has said, and working hard to “reduce resistance” from the country’s petrochemicals sector.

Osmar Chohfi, president of the Arab Brazilian Chamber of Commerce, told AGBI that current resistances revolve around “some sensibilities by the Brazilian petrochemical industry fearing unfair competition” but he said that it had made “much progress on that matter”.

Exports to the UAE from Latin America’s largest economy reached $3.3 billion in 2022, a rise of 40 percent on the previous year. Exports to Saudi Arabia and Egypt rose by a similar amount to $2.9 billion and $2.8 billion respectively.

A free trade agreement between Egypt and the members of the Mercosur trade bloc – Argentina, Brazil, Paraguay and Uruguay – came into force in 2017. Now Brazil is looking to make other deals in the region.

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Chohfi added: “Mercosur’s positive experience with the trade agreement with Egypt in terms of commerce growth and diversification of goods exchanged is helping us to advance the negotiation of fair terms for a totally new Brazil-UAE trade agreement.”

Talks would be further boosted by an investment facilitation deal already agreed by the two nations, which is pending approval by the Brazilian parliament, he said.

“The great activity of Emirati investment funds in Brazil is also making the local authorities aware of the importance of such agreements so more investment can get in the country. Brazilian companies see the UAE as an access platform for markets worldwide, not only the Arab markets.”

Total Brazil-Arab League trade reached $32.8 billion last year, a year-on-year increase of 35.1 percent, according to the Arab Brazilian Chamber of Commerce. Trade with GCC countries made up $20 billion of that total – a rise of 44 percent.

Brazilian exports to the Arab world hit $17.7 billion in 2022, an increase of 23 percent. The figure for the GCC was $9.4 billion.

Exports from the 22 Arab countries to Brazil grew to just over $15 billion last year, a jump of 53.4 percent. GCC exports to Brazil almost doubled to $10.8 billion. 

Arab exports to Brazil are led by oil, petroleum products and fertilisers. Brazil's export portfolio is dominated by food, with cane or beet sugar and sucrose its top exports to the Arab world, valued at $3.4 billion in 2022.

Brazil has also launched a project to boost its presence in the halal market, Chohfi said. Under the Halal do Brasil initiative, 500 Brazilian companies will be supported to access Arab and other Muslim-majority countries.

The Chamber of Commerce president said Brazil was keen to build bilateral relations in biotechnology, particularly when applied to agribusiness and food production.

“Brazil has plenty of experience in developing breeds of animals and varieties of crops with tailored characteristics, including high resistance to draught and thermic stress,” he said.

He pointed to Brazil's development of the Girolando cattle breed, which combines the high milk production of European cows and the resistance to dry environments of Indian breeds. 

“Technologies such as that can help Arab countries to overcome the challenges involving food production in a part of the world with significant limitations in terms of water and arable land,” said Chohfi.

“The statistics of Brazil’s food exports to the GCC countries demonstrate how the country’s output is important for the region’s food security. When the global wheat supply was hindered last year, due to the Russia-Ukraine war, Brazil supported the region by ramping up its supply.” 

Many Arab countries, particularly in the GCC, are keen to improve food security by developing local supply chains. This presents another opportunity for Brazilian businesses, according to Chohfi. 

“Some Brazilian food companies are already realising that they need to strengthen their presence in Arab countries by having local production facilities, so they conquer a bigger share in such markets. At least two major companies operating in the Brazilian agribusiness sector have already announced investments in Saudi Arabia and I believe more will follow.”

Tourism is another sector with growth potential, he said, adding that both governments were working "to increase the number of direct flights” from the UAE to the Amazon and Brazil's northeast.

One Brazilian expected to travel to the UAE soon is President Luiz Inacio Lula da Silva. He was due to visit Abu Dhabi on March 31 but this has been postponed because of a bout of pneumonia, but Chohfi pointed out that during Lula's first and second terms of office, from 2003 to 2010, his government showed "a great interest in the political, economic and cultural rapprochement with the Gulf and the wider Arab world".

The veteran politician's 2023 administration is expected to do the same. "We believe that the foreign policy introduced by the new government will foster trade and investment relations with the Arab nations," Chohfi said.

“We are confident that Brazil and the Arab nations will continue to be excellent partners in 2023 as well as in the following years.”