Brazil and Argentina Form United Front Against Chinese Invasion

    Presidents Kirchner and Lula

    Presidents Kirchner and Lula The recent Brazil-Argentina summit, with the master touch of Brazilian diplomacy, not only sent a clear political message of understanding between Mercosur main partners, but also evidence of that close coordination.

    During Argentine president Cristina Fernandez de Kirchner visit to São Paulo the Brazilian government announced it was prepared to extend a US$ 600 million credit to Argentina for the purchase of aircrafts for the recently nationalized flag air carrier, Aerolineas Argentinas.

    Financing for the operation would come from Brazil's Economic and Social Development Bank and the company to benefit from the future order, Embraer, Brazil's main air industry and one of the world's leading manufacturer of mid range commercial aircrafts.

    Furthermore at the business leaders meeting in São Paulo, under the eloquent name of "Argentina's Week", two sectors which had been quarreling reached agreements, footwear and naval construction.

    According to press reports from São Paulo, Argentine representatives from both industries "were most satisfied with the agreements" signed with their Brazilian counterparts.

    "The objective now is to fight against the common evil, Chinese products which are sold at dumping prices" both in Argentina and Brazil.

    "With bilateral differences back on the right track, we must address the outside enemy".

    Argentine president and her Brazilian counterpart called on Friday, March 20, for speedier financing of joint development and commerce projects to help stimulate decreasing bilateral trade.

    At the regional summit and a few days away from the crucial G-20 global summit in London, both leaders did their utmost to transmit a coordinated image.

    Following a meeting at the all powerful São Paulo Industries Federation, FIESP the two leaders downplayed recent trade differences and emphasized the need to strengthen close links to help boost South American economies.

    "We've designed a strategy for the finance protocol agreements to become active", said Mrs. Kirchner during the press conference that followed the closing of a trade seminar of Argentine and Brazilian businessmen.

    "We've agreed that given current global conditions we must act with great intelligence so as to help finance infrastructure projects", added the Argentine president.

    Bilateral trade between Mercosur senior members has plummeted in the last few months as the world recession advances worldwide.

    Trade last year totaled a record 30.8 billion US dollars but in the first two months of this year has fallen over 40% and is below half the value of the same period a year ago.

    Although Argentina and Brazil consider their relation as "strategic", Buenos Aires has complained bitterly about its neighbor's growing trade surplus, and different Argentine business sectors have requested government support and protection measures.

    FIESP complained to the Brazilian government in February that the Argentine decision to demand non automatic import licenses on 200 products was hindering Brazilian exports of foot wear, textiles, while line home equipment, among other items.

    Brazil proposed limiting some exports to Argentina, as long as those "spaces were not filled by Asian products".

    However Brazilian president Lula da Silva minimized the disputes and called on business leaders from both countries to explore the "political and economic potential" of the strategic Argentine-Brazilian alliance in the framework of Mercosur.

    Junior members of the South American trade block, Uruguay and Paraguay also claim they have been left aside by the strategic alliance, which limits their trade and conditions (politically) access to a special infrastructure development fund created to help the weaker economies.

    "Brazil and Argentina will grow less fast this year but they will continue to expand", emphasized Lula da Silva. "Our economies must be the industrial locomotives for Mercosur and the rest of the continent", added the Brazilian president.

    Argentina and Brazil will be participating next month in the G-20 summit at London representing Latinamerica together with Mexico.

    Mrs. Kirchner criticized developed countries "for not detecting the crisis or not communicating the crisis they had detected", adding this is evidence of the need for deep reforms to the global financial system.

    Mercopress

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    • Show Comments (10)

    • João da Silva

      [quote]That is the reason why it’s highly unlikely that the Central Bank will lower the selic:Lula and co need the money to pay the court jestors![/quote]

      DonÀ‚´t we all know it ?

      [quote]mandioca is going to be used in a biofuel production experiment in Botucatu city.[/quote]

      We will see the Mandioca prices to go up skyrocketing. It is sad to see the basic food item being converted into fuel to feed the automobiles instead of human beings.

    • du 48

      Spread rates,Internal debt, tapioca puffs and mandioca flakes
      On the subject of interest rates, Ex-Pres. FHC mentioned last night on Cultura TV’s Roda Viva, almost as if by the way, the HUGE public debt and massive government spending, on the civil service,for example :That is the reason why it’s highly unlikely that the Central Bank will lower the selic:Lula and co need the money to pay the court jestors!

      According to Washington Novaes,respected biodiversity expert and journalist,mandioca is going to be used in a biofuel production experiment in Botucatu city.(Faculty of Sao Paulo State University)
      Advantages? Cheap production-NO agrotoxics or fertilizers and strengthening of family farming -smallholders, WHICH ACCOUNTS FOR 70% OF HOME MARKET FOOD PRODUCTION.
      HALLO, BNDES!

    • João da Silva

      Ch.c
      [quote]And while you are 100 % sure that your rates already came down, let me tell you that the reality is the exact opposite. [/quote]

      I never said with 100% certainty that the drop in the rates will be [i]adequate[/i] to stimulate any entrepreneur to borrow money to set up new enterprises. So please do not try to put words into my mouth.

      [quote]On your “Brasilian companies setting up their manufacturing plants in PRC.” Well…that is globalization that you should do more.[/quote]

      Right. We have to send our workers who lost their jobs to PRC and pay the same wages as the Chinese workers get. Also I recommend to the government of PRC to take some of our labor court judges so that they can take care of our “Guest Workers” in China. Whoever is unwilling to go to PRC, will be sent to the Gulags of Switzerland.

      [quote]And this will/could NOT change….until your Selic and banks spread rates…..DONT GO MUCH MUCH MUCH LOWER.[/quote]

      Will happen on the “Blue Moon” night!

      [quote]Absolutely….HILARIOUS !!!!!!![/quote]

      Agreed. I am not contesting. 😉

    • ch.c.

      SELIC and Spread rates will come down only when the competition comes into picture !
      WRONG !
      The SELIC rate is established by your Central Bank. Where comnpetition then comes from ?
      Simple : from lower rates currencies in developed nations.

      And while you are 100 % sure that your rates already came down, let me tell you that the reality is the exact opposite.
      The spread rates between developed nations rates, including the spread rate of many developing nations….against the
      Brazilian rates ARE EVEN HIGHER THAN BEFORE THE CRISIS AT END 2007 !
      Simple example : before the crisis the U.S. rates were at 5,25 %, and the Selic at 12 %, or at a 6,75 % spread. Right ?
      Now the spread is at well over 11 % !!!!!!!!!!!

      On your “Brasilian companies setting up their manufacturing plants in PRC.” Well…that is globalization that you should do more.
      For example for your sugarcane ethanol. Why not invest and produce sugarcane in the…USA ?
      You get automatic high U.S. sugar government protected prices and no longer subject to the 54 cents ethanol import taxes !!!!!
      Just think about it ! Hmmmmm !
      And this would be more easy and profitable if your companies had LOWER Brazilian interests rates.
      Do you think NestlÀƒ© Brazil are dumb enough to borrow much money in Brl at Selic rates PLUS Brazilian banks spread ???????
      Hmmmmm ! laugh !

      And on your BNDES comments. Somewhat strange that at the WTO Brazil cries about the developed nations agriculture subisidizes….whean nearly ALL brazilian industries, INCLUDING agriculture, receive BNDES money at SUBSIDIZED INTERESTS RATES !!!!!!!
      That is Brazil…with their arrogants and non sense complaints !

      And this will/could NOT change….until your Selic and banks spread rates…..DONT GO MUCH MUCH MUCH LOWER.

      Finally just go back to my comments dated December 30 or 31. At that time, the “experts” predicted a 12 % Selic rate for end of 2009.
      My own estimates were for 10 %, possibly lower !
      😀 😀 😀 😀 😉 😉

      Now I am more in the 9 % Selic rate, possibly lower….but….but….but-…. these rates would still be WAYYYYYYYYY TOO HIGH….in view of your inflation rate and the spread rates with other developed and emerging nations rates.

      Enjoy your 12-14 % mortgages, 30 % rates for cars, 50 % rates on consumer goods, and 180-200 % rates on overdrafts.
      And all these rates in a 4 % or so….INFLATION ENVIRONMENT !

      IMPRESSIVE…THE BRAZILIAN UNCOMMON SENSE !

      Viva Robbing Hook who is hooking you 24/7 and even hook his own public statements of how good his policies are !!!!

      Absolutely….HILARIOUS !!!!!!!
      😀 😉 😀 😉 😀 😉 😀 😉 😀 😉
      😉

    • João da Silva

      DU 48
      [quote]600 million dollar credit for Aerolineas Argentinas! STRATEGIC nonsense.[/quote]

      You hit the nail right on the spot. Aerolineas Argentinas was bought by the Spanish Carrier (IBERIA?) which ran it with absolute incompetence and went bankrupt.Now, BNDES is going to save their asses with [i]our[/i] tax money. Remember, EMBRAER also was state owned? It was sold (like TELEBRAS) by FHC for peanuts. Nobody questioned about the hundreds of thousands of jobs lost during the privatization. Now, BNDES is going to save the asses of all the privatized companies that were ill run and went bankrupt all over the MERCOSUL with the Brasilian Tax payers money.

      [quote]STRATEGIC nonsense.[/quote]

      If at all they had and have a “Strategy”. I am glad that you brought up some interesting points.

      BTW, now that Collor has been elected as the “President of the Senate Commission for Infrastructure”, just watch the news in the next few months as how our money is going to blown away.

    • du 48

      600 million dollar credit for Aerolineas Argentinas! STRATEGIC nonsense.
      I heard about this last week from Miguel Daoud on Canal Rural RBS last week.
      Staggering to think that Brazilian public money is going to finance Argentina’s BANKRUPT ‘national carrier’ -recently renationalised- to buy BR jets from Embraer.
      Obviously BNDES has run out of ideas of how to spend it: How about in Brazil,for a change?

    • João da Silva

      Ch.c
      I had to needle you to flush you out of your deep slumber!

      [quote]The solutions ? Reduce your SELIC RATE to levels competitive with your peers such as China, South Korea, Chile, etc ! Reduce your Banks spread rates, one of the world highest. This would not only help your entrepreneurs but will also reduce the country debts growth rate…and create millions of jobs..with higher salaries thus also higher consumption including more taxes for your government even if taxes are reduced ![/quote]

      Yeah, now you are coming out with solutions . I like to study the problems, come out with alternative solutions, listen to my peers and take a decision. BUT….BUT….., let me remind you that the Banking Industry has to be opened to more competition from outside. SELIC and Spread rates will come down only when the competition comes into picture.If you do it by a Presidential decree, only banks that will obey are BB and CEF and they will eventually go bankrupt for obvious reasons :D. If we call the Chinese “Evil” and our Arab friends “Islamo-Fascists”, they are not going to bring any banks nor any money. 😉

      [quote]Sorry but Brazil is developed enough to build infrastructure.[/quote]

      Of course it is and I am one of the first ones to agree. But…BUT….where is the money? BNDES can not finance all the projects, including the ones outside Brasil or purchase of a company by another (I am specifically referring to the acquisition of Brasil Telecom by “Oi”). BTW, the reason for that “merger” was to create a powerful “National” company to “compete” with the Spaniards.Wrong signal to the Foreign investors.

      [quote]Do you really believe that in 10-20 years Brazil foods will be as needed as today in China ?
      China is already exporting CHICKENS…to the USA…if you did not know !
      China is already producing far more grains than Brazil…..if you did not know ! True…their population is around 7 times the
      population of Brazil ! But their production growth rate is far more than Brazil.
      China is also already exporting milk products to the USA…if you did not know !

      It is cheaper to produce iron ore in Brazil, ship it to China, have them make steel, and then re-export to Brazil at a much lower price than Usiminas ![/quote]

      Yes, I know all that, thanks to you. One thing you forgot to mention is about the raw leather hide exported to China and the finished Shoes coming back to Brasil or the Brasilian companies setting up their manufacturing plants in PRC. 😀

      [quote]Come on !
      Dont forget to tell the above to your uncle…..Da Silva….on your next call ! [/quote]

      I will certainly tell it to my uncle and not forget to transmit [i]your[/i] [b]Bear-Hug[/b] to him. 😉 😀 😉

    • ch.c.

      Joao !
      Funny on the Bimbo next door ! You could say the same about Robbing Hook !
      😉 😉
      Here is a good article today in Bloomberg on the Bimbo next door :
      http://bloomberg.com/apps/news?pid=20601109&sid=apN5Xd3qU8I8&refer=exclusive

      On high tech companies you are somewhat right. But your seat has been taken years ago by Asia…at a time you stayed too long at the beaches and in carnivals ! 😀
      What would you do now if you had more high tech FOREIGN companies ? Sell to whom ? Asia, Africa, USA, the EU…or for local use only ?
      I just remind you that until last year the World Most Expensive Country for Apple products was….Brazil !
      And by a wide margin !
      Research done by an Australian bank.
      But…but…but…. Brazil the nouveau riche….can afford ! Right ? CAN AFFORD EVEN MORE THAN DEVELOPED NATIONS …SINCE APPLE PRODUCTS ARE FAR MORE EXPENSIVE IN BRAZIL THAN IN DEVELOPED NATIONS ? RIGHT ? smile
      Even more funny when most of these goods are made in…ASIA !
      Or would Brazil close even more their imports with your imports substitution economic model ?

      I just remind you that even on your exports, two thirds are basic commodities.
      Better yet, most of these commodities can be produced ONLY DUE TO FOREIGN COMPANIES IN BRAZIL…OR….FOREIGN COMPANIES NOT IN BRAZIL.
      Be it for goods such as dozers, trucks, harvesters, locomotives, cars, machineries, etc etc etc or such as grains seeds, fongicides & pesticides.
      Including for your own consumption. NestlÀƒ© alone has 29 plants….in Brazil ! NestlÀƒ© Brazil also exports a lot.
      Milky Ways bars sold in the U.S. are mostly produced in Brazil !

      The solutions ? Reduce your SELIC RATE to levels competitive with your peers such as China, South Korea, Chile, etc ! Reduce your Banks spread rates, one of the world highest. This would not only help your entrepreneurs but will also reduce the country debts growth rate…and create millions of jobs..with higher salaries thus also higher consumption including more taxes for your government even if taxes are reduced !

      On your “attract Foreign Investment to develop our infrastructure”. Sorry but Brazil is developed enough to build infrastructure. Are you not building infrastructure in Ecuador, Venezuela and tried hard until last year to get some infrastructure contracts from Middle East Oil Producing nations ? Therefore why expect FDI inflow for infrastructure ? TRUE…….most of these works done outside the country are…….AT GOVERNMENT SUBSIDIZED INTERESTS RATES. Somewhat funny to subsidize Brazilians companies to build infrastructure….outside Brazil, at a time Brazil lacks so much infrastructure !
      Typically Brazilian mentality !

      Do you really believe that in 10-20 years Brazil foods will be as needed as today in China ?
      China is already exporting CHICKENS…to the USA…if you did not know !
      China is already producing far more grains than Brazil…..if you did not know ! True…their population is around 7 times the
      population of Brazil ! But their production growth rate is far more than Brazil.
      China is also already exporting milk products to the USA…if you did not know !

      It is cheaper to produce iron ore in Brazil, ship it to China, have them make steel, and then re-export to Brazil at a much lower price than Usiminas !

      Come on !
      Dont forget to tell the above to your uncle…..Da Silva….on your next call !
      😉 😉

    • João da Silva

      [quote]”The objective now is to fight against the common evil, Chinese products which are sold at dumping prices” both in Argentina and Brazil.[/quote]

      The title of the article as well as the following statement do not make any sense at all:

      [quote]”The objective now is to fight against the common evil, Chinese products which are sold at dumping prices” both in Argentina and Brazil.[/quote].

      I really wish our friend Ricardo Amaral reads this article. While people like him and many other sane Brazilians are lobbying hard to ease our Tax and Labor laws to attract Foreign Investment to develop our infrastructure and set up hi tech industries, our “Authorities” call the Chinese “Common evil”!!. If the Arabs want to build Dubai style ports, I am sure the authorities will follow the example of Dubya and call them “Islamo-fascists” and fight against them.

      With this kind of pompous and nationalistic declarations (which are bound to be read by the Trade attachÀƒ©s of all the countries including PRC and passed on to their superiors in their respective capitals), I don’t think that the Chinese or the good folks from U.A.E. would be rushing in to invest any money here. Nor can I predict the resumption of Doha round of talks any time soon.

      [quote]Mrs. Kirchner criticized developed countries “for not detecting the crisis or not communicating the crisis they had detected”, adding this is evidence of the need for deep reforms to the global financial system.[/quote]

      If Mrs.Kirchner had participated in this site (or asked one of her sidekicks to do so) and read the comments of Ch.c, she would have learned that the trouble was looming at least 12 months ago. 😀

    • ch.c.

      with the master touch of Brazilian diplomacy !!!! YEAHHH !!!!
      What a Master Touch of Brazilian diplomacy…….. “The objective now is to fight against the common evil, Chinese products which are sold at dumping prices ” and …….”Brazil proposed limiting some exports to Argentina, as long as those “spaces were not filled by Asian products””.

      And….and….listening to Robbing Hook filthy and smelly mouse…….has HE not said HE IS FOR MORE FREE TRADE ???????????

      And also as I said time and again….yessssss…..Brazil is for more free trade where Brazil exports, but not at all on Brazil imports.

      PROVEN….TIME AND AGAIN….TIME AND AGAIN….TIME AND AGAIN !

      😮 😮

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