APPENDIX 19
Memorandum submitted by Paul Eadie
DIFFICULTIES AND
OPPORTUNITIES
Without question there are many opportunities
for the UK to expand its trade with Brazil.
Exports at £840 million in 2005 (up from
£792 million in 2004) are still way below the levels they
should be, cf UK exports to Brazil in 1997 of over £1 billion.
Against that it has to be recognised that Brazil
having pursued rigorous import substitution from 1964 to 1991
still makes importing into Brazil difficult. There are still import
tariffs, requirements for certificates some of which are difficult
to define, lengthy Product Registration procedures. Difficulties
with Customs and for Foreign Companies wishing to exhibit at Brazilian
Exhibitions awkward Temporary Import regulations and paperwork
and bureaucracy issues.
In addition, Brazilian companies will try to
encourage local production. Examples are the Car Industry, Embraer
(Aircraft), Petrobras (oil and Gas) as well as the tariff reduction
incentives open to foreign Investors. Of course, Brazil is a huge
country and there are definite advantages in producing locally
in order to be able to access the vast potential that exists.
You can see examples of the imperative to nationalise imported
products when you visit the likes of Fiat, Embraer and Petrobras.
Not for nothing does Brazil run a Trade Surplus of US$40 billion.
It should be added that Brazil ought to be looked
at as an alternative to China and India for sourcing products
,Brazil is politically closer to the UK than China or India.
For UK Investors in Brazil there are bureaucratic
difficulties such as work Permits and registration on Siscomex,
the computerised Customs system to facilitate imports which add
value to local production. This can often take six months. Again
I have an example of this in the oil and Gas sector.
Of course if Brazil can obtain better access
to EU markets for its Agricultural Produce then a corresponding
easing of import restrictions is likely to follow.
Language is another obstacle and this is not
made easier by the Brazilians' belief that more of them now speak
English, officially the second language in Brazil. There is no
doubt that more, particularly the young generation, speak English
but at Middle and technical Management levels there are still
many whose knowledge is weak or non-existent. I can give examples
of non-response to follow up correspondence from Brazil which
baffles UK Companies. I am dealing with one such at present where
after one year of non-response my intervention in sending an email
in Brazilian Portuguese has set up a meeting.
I am dealing with another NW company who met
a potential Brazilian Partner in Liverpool last month and wants
to join the UKTI supported Go Brazil Mission in March 2007. He
had emailed Brazil four times to get a response as to whether
the dates suited and got no response.
Brazil suffers from ignorance or mistaken perceptions
and Posts can identify Opportunities which then require professional
presentation in the UK. Resource is obviously a problem. It is
perhaps interesting to note that in 1996 we ran a campaign Link
into Latin America and as stated above exports to Brazil in
1997 exceeded £1 billion and were greater than our exports
to China.
In IT several companies are successful in selling
specialised software. Hardware is more difficult and the local
Brazilian Trade associations are successful in lobbying against
imports. This is often the role of Trade associations in Brazil
so part of the solution must be to encourage more co-operation
between UK and Brazilian Trade associations. There are examples
of this in the Engineering sector.
Most of the large UK Financial service sector
companies are already present in Brazil. Brazil decries our lack
of participation in their Privatisations but this is possibly
because Brazil understands Privatisation differently from the
UK who are world Leaders. PPP is also of Great Interest to Brazil
and visits from the Lord Mayor of London can only assist in this.
Last year the Lord Mayor visit in September 2005 and there will
be a longer visit in September 2007. Again Perceptions of Privatisation
etc need improving and it is worth bearing in mind that Brazil
still has a tendency to try to centralise control. Old habits
die hard.
Quite correctly UKTI and the Select Committee
have identified Brazil as being underexploited by the UK. In part
this is due to the fact that we were their largest Trading Partner
in the 19th and first half of the 20th Century but then for various
valid reasons we left Brazil and Latin America deeming the continent
as a whole to be economic basket cases.
Brazilians still trust us more than other countries
and they have an enormous respect for our institutions, industrial
expertise and integrity.
Because of the ignorance of what Brazil has
to offer in the UK the truth should be easy to disseminate but
it requires active Promotion and targeted assistance to Companies.
Our Trade with Brazil is poor when set against
our achievements in Markets much smaller in size, eg Malaysia.
This can and should be corrected.
6 December 2006
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