Brazil, Argentina create business council to expand cooperation

Executives from Brazil’s National Confederation of Industry (CNI) and the Argentine Industrial Union (UIA) met in Buenos Aires and decided to create the Brazil-Argentina Business Council (CEMBRAR), whose goal will be to identify trade opportunities and common policies the two governments may adopt in order to promote cooperation in the public sector as well as the private enterprise.

The gathering was held in a moment when MERCOSUR has virtually come to a standstill due an institutional crisis.

Chief partners in the bloc, Brazil and Argentina are also going through internal economic difficulties. In the case of Argentinians, who rely strongly on exports in the Brazilian market, President Mauricio Macri is facing the challenge of reducing a yearly inflation of nearly 40% and a fiscal deficit, inherited from his predecessor Cristina Kirchner, whose second consecutive term as president ended last December.

CNI

The Brazilian business mission, led by CNI head Robson Braga de Andrade, ends today (Sep. 9). The visit, Braga says, aims to draw investment to “expand the productive capacity, boost bilateral trade, stimulate innovative activities and also generate employment.”

Between 2008 and 2011, Brazil was Argentina's top foreign investor, with a yearly flow at an average of $1 billion. After 2012, however, the amount plunged by 70%, and reached an annual average of $300 million. Today, Brazil ranks fourth among Argentina's investors, after the US, Spain, and the Netherlands, with investments stocks adding up to $6 billion in the neighboring country.

From 2006 up to last year, Brazil's participation in Argentine exports slipped from 34.4% to 22.2%, whereas China rose its share from 9% to 15%. In 2015, Brazil exported $12.8 billion to Argentina—the worst performance in the last decade—10% lower than it was in 2014 and 44% lower than the value observed in 2011. Investors believe, however, that both the public sector and the private enterprise may take joint measures to improve the  scenario.

In order to do that, Brazilians, for instance, wish to cut the dividend rate paid by Brazilian companies in Argentina by 10% (as this rate is not charged in Brazil). The industry in both countries also plan to authorize public purchases in MERCOSUR and create a public-private fund to finance projects.

Translated by Fabrício Ferreira