Nov 01, 2010
Brazil-China Trade Commission to Discuss Trade/Currency Policy
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazilian officials have finally managed to schedule a meeting in Beijing to discuss trade relations between Brazil and China as well as China's currency policy. A trade commission between the two countries was set up in 2004 for the purpose of discussing trade issues, but the commission has only managed to meet one time in six years. Brazil has been trying to schedule a meeting of the commission for two years, but Chinese officials continued to disagree on agenda items. The two sides have finally agreed on an agenda and the second meeting of the commission is scheduled for November 15 and 16 in Beijing.
The Brazilian government will insist on the need for diversifying the type of trade between the two countries. The Brazilian government feels trade between the two countries is unbalanced. Currently, soybeans account for 33% of Brazil's exports to China, iron ore accounts for 30% and petroleum accounts for 10%. Chinese exports to Brazil consist of 95% manufactured items. The trend is obvious, Brazil exports raw commodities to China and China exports manufactured items to Brazil. This is the trend that the Brazilian government wants to change.
Until now the Chinese officials have said that the trade between the two countries simply reflects the nature of the two economies and if Brazilian companies want to sell more manufactured items in China they just simply need to do a better job of promoting those items.
Brazilian officials are also expected to raise the issue of currency manipulation by the Chinese government. Brazil claims that the Chinese currency policy gives an enormous advantage to Chinese exports and that it amounts to a huge subsidy for Chinese manufactures.
Brazil also wanted to discuss the issue of roadblocks put in place by China to limit Brazilian meat exports, but Chinese officials said this was not the right forum for those types of discussions.