POLITICS-BRAZIL: Asian Tour Marks Cardoso’s Renewed Diplomacy

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jan 16 2001 (IPS) - Brazil’s President Fernando Henrique Cardoso departed Monday on a 10-day tour that includes stops in South Korea, East Timor and Indonesia, as he revives attempts to build closer ties with Asia after being interrupted by the financial crises of the last three years.

The primary objectives of this first visit by a Brazilian president to South Korea and Indonesia are to boost trade and attract investment, while the stop in East Timor is intended to affirm Brazil’s willingness to contribute to building the newly independent nation.

Cardoso is to sign an agreement in South Korea on Thursday for cooperation in the peaceful use of nuclear energy, an accord that has been under discussion since 1998 and covers activities such as research and construction of electricity-generating reactors, as well as applications in agriculture, medicine and industry.

On Friday, the Brazilian leader is scheduled to visit the border separating North from South Korea, a symbolic gesture of support for the unification process spearheaded by South Korean President Kim Dae Jung, who last year received the Nobel Peace Prize for his endeavours.

But what most concerns Brazilian diplomats are the country’s trade relations, prompting them to organise a forum Thursday for business leaders from Brazil and South Korea in which they can discuss business opportunities and trade.

Brazil imported 1.3 billion dollars in goods from South Korea from January to November 2000, producing a trade deficit of 792 million dollars. In 1999 there was also a negative balance with the Asian country of 358.5 million dollars, according to official data.

Imports from South Korea grew 40 percent last year, while exports were limited to an expansion of 9.7 percent. Brazil’s high demands feed the imbalance, which tends to grow in the areas of electronic components for televisions, computer and telecommunications equipment.

Also affecting the imbalance is the fact that “the Korean market for farm products is one of the most protected in the world,” with tariffs reaching 996.3 percent and an average of 112.1 percent for vegetable products, and a high of 264.6 percent and an average 22.3 percent for livestock products, according to the Brazilian Foreign Ministry.

Brasilia seeks to reduce these barriers in order to improve its farm exports and achieve a balance in bilateral trade. To do so, one of the goals is to sign a sanitation accord, establishing common regulations for the exchange of agricultural products.

Brazilian officials are also interested in attracting South Korean investment to fuel industrial development, generate employment and, at the same time, substitute imports with internal production.

Some large South Korean firms, especially in electronics, such as Samsung and LG, have already set up shop in Brazil, representing 500 million dollars in investment, reported the embassy in Brasilia.

But data from Korea’s Eximbank indicate that its country’s investment in Brazil was limited to 179 million dollars at the end of 1999, representing just 0.8 percent of South Korean capital overseas, which totalled 22.3 billion dollars that year.

Meanwhile, a Kia Motors project to produce 30,000 vehicles annually in the Brazilian state of Bahia fell through. The plan was to take advantage of stimulus packages offered by the federal and state governments while the company was to invest 143.4 million dollars, creating 1,000 jobs.

The renewed economic growth of South Korea, following the crisis that originated in Asia in July 1997 and forced Seoul to devaluate its currency, appears now as a boost for bilateral relations, as Brazil is also on the rebound from financial problems in 1998 and 1999, achieving nearly four-percent annual growth.

The Brazilian president and his entourage are slated to visit Indonesia Jan 22 to 24 where they will also attempt to build economic relations, which are currently quite limited given the potential exchange between the two nations.

Like South Korea, Indonesia took a heavy blow from the Asian financial crisis, but its outlook is for economic growth on par with Brazil’s over the next few years.

After enjoying a trade surplus with Indonesia for several years, last year Brazil came up on the deficit side.

Brazilian exports to Indonesia totalled 197.7 million dollars from January to November 2000, while imports reached 234.9 million dollars, reflecting a 36.25 percent increase over 1999.

Bilateral trade, which surpassed 500 million dollars in 1997, with a Brazilian surplus of 57 million, declined in the following years due to the crisis affecting both countries.

Bilateral relations also felt the impact of the political situation in East Timor, a former Portuguese colony that Indonesia occupied in 1975.

Before flying to Jakarta, Cardoso will spend a day in Dili, capital of East Timor, where he will meet with Xanana Gusmao, president of the National Resistance Council, and with Jose Ramos Horta and Catholic bishop Carlos Bello, all leaders of the struggle for independence.

Horta and Bello received the Nobel Peace Prize in 1996.

In addition, Cardoso is to meet with the 70 Brazilian military personnel serving in East Timor as part of the United Nations force that is overseeing the country’s independence process.

The visit is intended to expand Brazil’s assistance in building the new country, with a focus on literacy efforts, teacher training and business development.

By Jan 24, Cardoso and his 150-person retinue will have circled the planet after spending a night in the Canadian city of Vancouver en route to Seoul, and a layover in South Africa’s Cape Town on the return trip.