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back to index backLATINtalk November,  2005

Brazil says China deal is falling short of its hopes

The benefits to Brazil of granting market economy status to China have fallen short of expectations, according to Celso Amorim, Brazilian foreign minister.

"We need to evaluate what Brazil has obtained in terms of investments and we don't have that evaluation yet, but our expectations were greater," he said in an interview with the Financial Times. "Investment is coming slowly."

Mr Amorim made his comments as Luiz Fernando Furlan, Brazil's trade minister, returned empty-handed from a meeting with his counter part, Bo Xilai, in Beijing at the end of last week. Separately from Brazil's pursuit of greater Chinese investment, Mr Furlan had hoped to secure agreement on voluntary curbs of Chinese exports to Brazil, mainly of textiles and footwear.

Since the dismantling of international textile quotas in January, the US and European Union, after imposing temporary safe guards on Chinese textile imports, have been holding similar negotiations with Beijing to achieve voluntary Chinese restraints.

Ahead of the EU, which is still debating whether to grant China such status, Brazil, Argentina, Chile and Peru granted market economy status to China last November during a visit to the region by President Hu Jintao.

By recognising China as a market economy, the countries made it harder to impose restrictions on imports of Chinese goods. Their hope was that China would reciprocate with greater investment in Latin America, which has been a big supplier of raw materials to the Asian nation. At the time, Mr Hu said China would invest $100bn (€83bn, £55.5bn) in South America over the coming decade, mostly in transport and other infrastructure.

The figure included a reported $9bn for investment in Brazilian ports and high ways. So far no such invest ment has materialised. "Furlan has had to go and try to sort things out after we gave China [market econ omy status] for nothing," said Rubens Barbosa, former Brazilian ambassador to London and Washington. "We were supposed to get infrastructure and other investment in return and it hasn't happened."

The powerful São Paulo state federation of industry called for the immediate implementation of safe guards by Brazil against Chinese imports, saying relations between the two countries had been marked by "a series of errors".

Turning to other issues, Mr Amorim said Brazil had been right to press for a seat on an expanded United Nations Security Council despite the collapse of attempts to reform it.

Mr Amorim said he was encouraged by recent talks with Condoleeza Rice, US secretary of state, to believe that the door to reform remained open.

He also responded to criticism of Brazil's role in Haiti, where security remains pre carious despite the presence since June 2004 of a UN force now numbering 7,600 soldiers, mostly from Brazil. "It has been a learning process, and we didn't have a precise idea of everything we would face when we went in."

Source: Financial Times - GAI

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