Brazilian agribusiness is likely to benefit from the US Trans-Pacific Partnership (TPP) withdrawal, announced by President Donald Trump earlier this week.
One of the biggest US competitors in grain and meat production, Brazil now sees an open door to markets traditionally dominated by American commodities.
In an interview with local newspaper O Globo, the president of the Brazilian Foreign Trade Association, José Augusto de Castro, said that, in the short term, Brazilian exporters of meat, orange juice, sugar and soy will be the greatest beneficiaries of the TPP withdrawal. It will all depend on how the Brazilian government negotiates with Asian-Pacific markets in the upcoming months.
Economic pundits are positive that Brazilian agribusiness will see an increase in exports after Trump's announcement. Other Mercosul countries, especially Argentina, could also use the opportunity to open a commercial channel with Asian nations.
However, the Brazilian economy could experience a negative impact if the 1994 trade deal between the North American countries, also known as NAFTA, is renegotiated by the US government.
About 80% of all Mexican exports go to America. If the trade deal is scuttled, Mexico could see the need to explore other markets and compete with Brazilian commodities. The trade between the two Latin American countries may also be compromised due to new arrangements. With the Mexican government likely to adjust the taxes of products and services, Brazilian importers of Mexican agricultural inputs might have to deal with a price increase.
While, in the short term, the impact of the TPP withdrawal is expected to be positive, experts seem to agree that, in the long term, the protectionist posture of US President Donald Trump could be emulated by other markets. As a consequence, restrictions may apply to future international trade.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Josiane Lang. Click subscribe to sign up for ESM: The European Supermarket Magazine.
