Friday, April 4th 2008 - 21:00 UTC

Diversified markets have cut Brazil's exposure to US crisis

Brazil's Foreign Secretary Celso Amorim said that those countries which have signed free trade agreement with United States are the most vulnerable to the consequences of the US housing and banking crisis, contrary to Brazil that has “diversified markets”.

Mr. Amorim statement followed a question about Brazil's "scarce interest" in signing a free trade agreement with United States in the framework of the Washington sponsored Free Trade of the Americas Association, FTAA. "There's a paper from the Center for Economic and Policy Research which argues that the US crisis will have an impact on all the countries of the Americas", said Amorim during an event sponsored by Brazil's Economic and Social Development Council which gathers ministers, presidential advisors, President Lula da Silva, academics and the CEO of the country's main corporations. "But the most severe impacts will be suffered by those economies most integrated to United States, those that have free trade agreements with the US", he added. "Markets diversification" has been the main foreign policy line of action for President Lula da Silva's administration revealed Amorim during his intervention in the open forum which was broadcasted live on government television. Amorim said that trade with Mercosur partners (Argentina, Uruguay and Paraguay) has grown 320% under President Lula da Silva (2003) and currently is higher than with United States. Trade with Latinamerica and the Caribbean soared 262% in the five years of the current administration, which makes the region even more significant commercially than the European Union. "Latinamerica and the Caribbean are more important markets that the European Union. Mercosur has become a more important market than United States" said Amorim who added that these facts are essential to understand "why Brazil is less susceptible to a crisis", such as is happening in the US. Brazil's Foreign Secretary also underlined that the package announced last Monday by US Treasury Secretary Henry Paulson giving the Federal Reserve greater regulatory and intervention powers over financial markets signal a clear change in the course of Washington's economic policy. "It means returning to a vision which had practically disappeared in a time when the three dogmas essential for any economic policy were: liberalization, privatization and deregulation", he underscored.

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