2023-04-24 17:21:44
Recently, Brazil and China signed trade agreements totaling US$ 10 billion, as a result of a high-level visit led by President Luiz Inácio Lula da Silva. The relationship between the countries has been developing and strengthening for years. In this third term of Lula at the head of the Brazilian government, it seems that this relationship with China will reach levels never seen before. The announcements are positive, it remains to be seen how the difficulties in implementing them will be resolved.
Thiago de Aragon, for RFI
While trade between Brazil and China could generate benefits for both parties, there are concerns that it could cause de-industrialization in Brazil. To avoid this, the Lula administration seeks Chinese incentives to promote industrial and technological areas focused on green technologies.
In addition, the Brazilian government is also considering industrial policies that can boost the national industry. These industrial policies, however, are nothing new for Lula. In his previous administrations, the implementation of a new industrial policy was just an idea and expense, without execution.
However, with scarce financial resources available for projects like this, the Brazilian government will have to be creative in order to achieve its objectives. For this, he can use the country’s internal resources – including raw materials and a large internal market – in order to make Brazilian industries more competitive and capable of producing products that can be traded internationally.
Despite flirting with the idea of incentives and possible subsidies for Brazilian industry, in the end Lula knows that the complex tax matrix (in addition to the high burden) are the most common obstacles to the development of national industry.
Challenges
The announcement of projects and agreements may have been hailed as a positive step, but it is clear that there are still many challenges to be overcome when it comes to implementing the initiatives. Technology transfers will require delicate negotiations between two countries with very different industrial systems and regulations. The green hydrogen factory will involve costly infrastructure investments in an energy sector that faces numerous obstacles.
Offshore wind projects will be hampered by a lack of experience when it comes to generating renewable energy in the region. And the binational agricultural logistics company could face difficulties due to Brazil’s complex customs regulations. All of which means that while last week’s memo was certainly a step forward, it’s too early to say whether these projects will succeed.
However, it is always good to remember that numerous agreements and memorandums signed in 2015, between then-president Dilma Rousseff and Xi Jinping, were only on paper. One of the most striking was the Trans-Pacific Highway agreement, which failed to move forward due to problems, inexperience or loss of interest on one side or the other.
Many of the projects formed by Lula on this last trip run the same risk.
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