Fernando Damata Pimentel, Brazilian Minister of Development, Industry and Foreign Trade, on common interests and influences shared between Brazil and South Africa

Fernando Damata Pimentel, Brazilian Minister of Development, Industry and Foreign Trade, on common interests and influences shared between Brazil and South Africa

 

Brazil and South Africa’s trade relations in the recent past have signalled the possibility of new deeper partnerships. Bilateral trade increased from $659m in 2002 to $2.6bn in 2011. In the future, we want to improve relations with South Africa to create more business opportunities and reinforce the protection of new common interests through the global forums that deal with imperative issues on the international agenda.

Ties between the two nations were established recently and during major historic moments for both countries – the end of apartheid in South Africa and the redemocratisation of Brazil. Common requirements for overcoming problems in our models of development led us to set a different – sovereign – standard for trade partnerships. Our investments should highlight the importance of strengthening the economic complementarity that South Africa has with Brazil. We want to build an investment pattern whereby generating higher added value in local production is an intrinsic component. For us, development means effectively improving the quality of life of our citizens through distributing the gains of technological progress.

Mutual respect for sovereignty is the basis of Brazil and South Africa’s relationship and it is a principle we want to strengthen even further. The many similarities we share and the high degree of economic complementarity will help facilitate this. It should also be noted that both countries have the biggest industrial GDPs in their regions and that the diversity of their industrial bases offers an excellent opportunity for a productive exchange of knowledge.

The South-South dialogue will be able to expand on new fronts with the articulation and integration of the supply chains of both our continents and through upholding common interests in terms of social and economic development. A new geopolitical order in the South Atlantic may emerge from this new agenda, particularly given the potential for offshore oil exploration.

Our current agenda of cooperation, joint activities and initiatives is extensive. Traditionally, there has always been trade between Latin America and Africa, but Brazilian companies working in the areas of construction and services have in recent times started doing more business on the African continent. Nowadays, Brazil is promoting the internationalisation of its companies, and Africa has the potential to become a key player in this expansion. We consider that the gateway into the continent lies undoubtedly in deepening economic relations with South Africa.

We know that South Africa’s technology for gas liquefaction, coal production and extraction of minerals, such as platinum, manganese, vanadium and chromium, is complementary to the Brazilian productive base. There is also demand from South African companies for Brazilian technology in areas such as biofuels and hydraulic power generation. I believe that supporting the development of businesses that show great potential in these areas through initiatives is a common goal that the two countries are currently pursuing. We want to strengthen the mechanisms for supply of international credit and bank guarantees so as to facilitate this.

Intense cooperation between the countries’ agricultural ministries has taken place due to a common interest in setting up programmes to promote small farming. In the field of agricultural production technologies, Embrapa (Brazil) and the Agricultural Research Council (South Africa) have launched a technical cooperation agenda that has a promising future. We intend to enhance projects in this area in the coming years.

The regional importance that each country has in its respective continent, and the fact that both South Africa and Brazil are emerging countries, has put us in a position where our interests coincide with those of other developing countries when it comes to the ongoing global discussions on world trade, financial flows and capital. From an international perspective, both countries have much to gain from having similar national projects, especially from debates that take place at global governance institutions, such as the World Bank, the IMF, the UN and the World Trade Organisation. A clear sign of those similarities is illustrated by the numerous intergovernmental groups both countries are part of, such as the IBSA initiative, BRICS, the G20 and BASIC.

Moreover, the demand for the universalisation of access to basic health care services and education on our continents unites us and has urged us to boost cooperation, which is shown by the partnerships we have in the fields of entrepreneurship and public management. We are also aiming to increase cooperation in food security, infrastructure, mining, oil, renewable energy and defence. Significant potential in these areas was identified during our last business mission to South Africa, and we are now working towards fulfilling this.

Today Brazil is going through a unique moment in the history of its economy. We have consolidated a democratic and institutional model and have experienced a period of sustained growth that is associated with the expansion of our international reserves. The source of the country’s economic growth lies with the surge in domestic consumption, which has been achieved with a healthy national fiscal balance.

With the exploitation of its large offshore oil reserves, Brazil will set in motion a new phase in its history, with greater economic integration with South Africa enhancing trade relations between the two continents. New industrial, technological and foreign trade policies are currently being formed in Brazil, which is stimulating companies to “innovate to compete; compete to grow.” Forming these policies is a huge challenge, and it should be stressed that countries that have been successful in doing this and have reached a higher stage of development have taught us two important lessons.

The first is that the history of each country is moulded by the hands of its own people. Therefore, there is no ideal development model to follow. The second major lesson is the central role that scientific and technological knowledge plays in overcoming underdevelopment. What was already known about the social and economic power of knowledge in ancient civilisations was significantly amplified by the rise of the manufacturing industry as an engine of material production. The beginning of the new millennium marked the third century in which civilisation has been under the rule of the industrial system of production.

Radical innovations in the industrial system may, paradoxically, be accelerated by the depth and extent of the current global economic crisis. The search for a new cycle of sustainable gains in productivity, now under environmental pressure, can once again lead to the resumption of economic expansion. Brazil has responded to the major challenge presented by the leap in productivity by implementing a contemporary productive development policy. With its advanced manufacturing parks and services networks, as well as a science and technology system of significant scale and density, the country’s main instrument for dealing with stronger competition and the appreciation of the currency is to explore how stability and the resumption of investment and growth was achieved in recent years. We have formidable institutional, geographical and social assets: a large and growing market, state spending capacity, an abundance of energy resources, a young workforce and entrepreneurship. Innovation will play a crucial role in our industrial strategy and putting these forces in motion at the required speed in the future.

Incentives for the internationalisation of Brazilian companies have been adopted, and now is the time to establish new bridges towards an effective economic and institutional partnership with South Africa. We want our relations to reach a new level by improving our common projects and increasing our role in defining the directions of the world economy.

We hope that by working together, Brazil and South Africa can contribute to the economic integration of the South Atlantic as well as both of our regions. In addition, by utilising all the mechanisms for dialogue that we are both part of, such as BRICS and ISBA, we wish to foster the establishment of a new international order that is more democratic, transparent and just, and which ensures equal opportunities for all peoples.

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Fernando Damata Pimentel

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The Report: South Africa 2012

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