CARICOM needs clear approach for trading links with Brazil

PORT OF SPAIN, Trinidad, CMC- Caribbean Community (CARICOM) countries are being urged to develop “a clear approach” in order to establish a stronger trading alliance with Brazil, the largest Latin American market.

The Office of Trade Negotiation (OTN) at the CARICOM Secretariat said that Brazil remains a lucrative, but under exploited market for the region’s exporters.

It said that while CARICOM has been developing stronger trade linkages with Latin America including establishing trade ties with Venezuela, Colombia, Cuba, Costa Rica and the Dominican Republic, “there is still the need for a clear approach to establishing a stronger trade alliance with the largest Latin American market Brazil, which could assist in facilitating regional economic development”.

According to the OTN, which was formerly the CARICOM Regional negotiating Machinery (CRNM), the Caribbean incurred a significant merchandise trade deficit with Brazil in 2009.

It said that CARICOM’s merchandise exports to Brazil increased by over 31 per cent annually between 2001 and 2009, while imports from Brazil expanded by 32 per cent annually over the same period, “exacerbating the problem of the trade deficit, and indicating some loss of international trade competiveness for the region’s private sector vis‐a‐vis Brazilian firms”.

But the OTN noted that CARICOM firms have increased their dependence on Brazil for export earnings from 0.04 per cent in 2001 to 0.15 per cent last year.

“Additionally, CARICOM importers sourced an increasing share of their total merchandise import spending from Brazil,” it said, noting that in 2005, CARICOM sourced over five per cent of its total import expenditure from Brazil, and this increased to just under 14 per cent in 2008, “making Brazil an important import source for the region”.

The OTN said that Brazil is also a significant global services import market, adding that in 2007, the Brazilian market absorbed over US$37 billion in services imports, growing from US$16.7 billion in 2000.

It said that Brazil provides a “long list of service opportunities that CARICOM could explore in areas such as legal services, construction; operational leasing services; transport services; passenger air transport;

telecommunications and architectural, engineering and other technical consultancy.

But OTN said that CARICOM’s exports to Brazil are mainly resource based from Trinidad and Tobago

Suriname.

It said last year, Port of Spain was the main CARICOM merchandise exporter to Brazil, generating over 92 per cent of total export earnings, while Suriname, the Bahamas, Jamaica, Barbados and Guyana were the other notable exports.

Prior to the devastating earthquake in January this year, Haiti was the most dynamic exporting country from CARICOM to Brazil between 2001 and 2009 with merchandise exports expanding by over 81 per cent annually.

St. Lucia was the top importer from Brazil in 2009, with its imports representing over three‐quarter of the region’s total imports. Trinidad and Tobago, Jamaica, the Bahamas and Suriname jointly account for another 20 per cent of total imports from Brazil, the OTN added.

The top import from Brazil in 2009 was crude petroleum oils which represented over 77 per cent of CARICOM’s total import expenditure from Brazil.

“CARICOM importers source a large number of products that are also produced regionally. These products include poultry, sugar, wooden doors and frames, paper products, tobacco products, bovine meats and dairy products. These are areas that could be sensitive to competition from Brazilian imports,” the OTN added.