Wednesday, December 19th 2012 - 06:50 UTC

Brazil wants closer links with Mexico; Rousseff plans to travel next March

Brazilian president Dilma Rousseff is planning to visit Mexico in early 2013 taking advantage of the good chemistry with the new leader Enrique Peña Nieto, and with the purpose of re-launching the deteriorated relations between the two main economies of Latinamerica.

Peña Nieto and Rousseff when they met in Brasilia last September

And the big excuse for the approach is Petrobras, the Brazilian oil and gas giant with strong private participation and which has been a success in discovering and developing hydrocarbons offshore. This capacity could turn Brazil into one of the world’s leading oil producers and exporters in a few years time.

Executives from Mexico’s petroleum giant, Pemex are fascinated with the success of Petrobras as a model for their own country and wish to continue on the first collaboration steps planted by Peña Nieto and Rousseff when the then elected president visited Brazil last September.

“Peña Nieto caused a very good impression in Brasilia”, said diplomatic sources and “President Rousseff is travelling to Mexico probably next March”

The trip should also help to make the ups and downs relation more fluid, particularly since the early 2012 spat when Brazil imposed import quotas on Mexican manufactured vehicles in an attempt to contain the bilateral trade deficit.

Making the relation with Mexico more solid is very attractive for Brazil which has seen its economy stall with an annual growth of 1% in 2012, despite all the stimuli, and a deteriorating relation with Argentina, that has become the main market for Brazilian manufacturing.

Brazil is trying to tone down its protectionism with Mexico and last September in private talks the Rousseff administration said it was willing to discuss an expansion of the auto quotas. But there are also practical reasons since the cap was unable to contain the trade deficit with Mexico, which in the first ten months of this year has soared to 1.8bn dollars, particularly attracted by the high selling Mexican Ford Fusion of which President Rousseff has one.

The Brazilian auto industry is complaining that in the first seven months of the year the full twelve months Mexican quota has been used up but cars keep coming in despite a 35% tariff.

However despite Brazilian optimism things could not be that easy since the Mexican business community is distrustful of Brazil following what happened with the car agreement and also believe it is a “country with a far too closed market”.

“I believe it makes sense to have certain scepticism” said trade consultant Luis de la Calle who was one of the negotiators of the free trade treaty with the US and Canada. “The good chemistry is positive because without it you can’t advance but at the end of the day it all comes down to each country’s interests, and what is best both for Brazil and Mexico is a far more open trade relation”.

The president of Mexican businesspeople in Brazil, Eduardo Ragasol said that the Peña Nieto/Rousseff relation is full of good signals, such as the approval in record time of the new Mexican woman ambassador in Brazil. “But it’s too early to know when all this will materialize in concrete investments”.

Mexican corporations have been far more aggressive: millions of Brazilians use Claro cellular phones and watch television on the NET cable system from Mexican tycoon Carlos Slim; they have breakfast with Bimbo toasts and have soft drinks bottled by Femsa, all Mexican businesses.

Brazilians on the other hand have been rather shy but could see a turning point in 2015 when Braskem begins to build a huge petro-chemical complex in Veracruz, with an investment of 3.5 billion dollars.

But for bilateral trade to keep advancing with a quality leap, some kind of agreement is needed according to analysts. Given the complexity of the relation cooperation between Petrobras and Pemex could be a starting point.

In one of his latest statements Peña Nieto advanced he wants Pemex to work with strategic associations that includes the private sector following on the experience collected by Petrobras in Brazil.

14 comments Feed

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1 Elena (#) Dec 19th, 2012 - 07:54 am Report abuse
A good first step I think :) agree after the cars spat is better to begin with something the two nations bussines ppl are more positive and trusful like Petrobras and Pemex.
2 Shed-time (#) Dec 19th, 2012 - 08:50 am Report abuse
South americans don't understand free-trade.

It's simply that fundamental.
3 Elena (#) Dec 19th, 2012 - 10:18 am Report abuse
I think is more a case of mistrust than not understanding it, and is wrong to assume this of all south american nations , Peru, Colombia, Chile and Uruguay are all part of south america and use free trade.
4 redpoll (#) Dec 19th, 2012 - 01:34 pm Report abuse
Head shed Bit sweeping your comment isnt it? Perhaps look at all the regulations (quotas etc) that the Europeans impose on goods coming from outside, not only from South America but also from Australia and New Zealand to name but two
5 Shed-time (#) Dec 19th, 2012 - 01:42 pm Report abuse
@4 The europeans? the europeans? I don't really understand the European Union, it seems to consist essentially of lots of hyper-efficient germans telling spanish and greek people to snooze less, actually do some work and not retire at 23 with 200% final salary pension. Then it has french farmers earning far more than they ever dreamed of from the CAP, for sitting there drinking wine all day with a baguette.

The danish have the best idea, which is to assume a tactical orbit around such nonsense.

As you were.
6 redpoll (#) Dec 19th, 2012 - 03:07 pm Report abuse
Yep Shed agree with most of that. Yes the Danes sure bring home the bacon. They even tolerate Guzz in thier country
7 Think (#) Dec 19th, 2012 - 05:44 pm Report abuse
Glad to see that even the biggest Turnips inb here do understand that we, the Social-Democrat Scandinavians are faaaaar better than their Neoliberal ”Free (my left foot) Market“ system filled with falsehoods.....

And quite funny to see the same Turnips comenting about Mexicos ”Free Trade” in an article mentioning PEMEX......
Don't this turnips have a sense of shame?
Do they know the history of PEMEX and Mejico?
Do they know.... anything?
8 Shed-time (#) Dec 19th, 2012 - 05:57 pm Report abuse
@7 Social-democracy works well so long as people keep buying things from IKEA and the Nokia Shop.

If they stop, it all stops.
9 redpoll (#) Dec 19th, 2012 - 05:59 pm Report abuse
Nice to see you back Mr Mangelwurzel. You been off chasing Patagonian hares? What they taste like? Like to know as of course they are a protected species but mebbe that is of no importance to you
10 emerald (#) Dec 19th, 2012 - 06:33 pm Report abuse
Do they know the history of SAAB and SKF ?
Do they know.....anything?
11 Think (#) Dec 19th, 2012 - 07:24 pm Report abuse
More good news from the Argentinean Front……

”Argentine energy company YPF signed a partnership deal with U.S. oil major Chevron Corp on Wednesday ……”

The details of a permanent deal will be negotiated over the next four months. The companies said Wednesday's letter of intent envisions an initial joint venture to drill 100 non-conventional oil wells at a cost of $1 billion…….

However, Galuccio and Ali Moshiri, Chevron's head of operations for Latin America and Africa, said the pact signed on Wednesday only covered a pilot phase……

“The question is going to be how big the investment is going to be beyond the pilot,” Moshiri told reporters. “Our goal is to start as soon as possible. What we need is to push our teams to put a definitive agreement together as soon as possible..........”
12 Chicureo (#) Dec 19th, 2012 - 08:15 pm Report abuse
Brazil is making the correct pragmatic moves to develope beneficial bilateral trade agreements. Free trade is becoming passé, as more countries are asking for fair trade instead. Chile of course just wants to sell copper...
By the way, PEMEX is the symbol of near perfect corruption... Chevron's entry into investing in Argentina is the perfect example of greed overwhelming common sense. The continuing survival of CFK is beyond reason...
13 Elena (#) Dec 19th, 2012 - 08:53 pm Report abuse
I would say more like slow and dated administration in Pemex, its syndicate lost most of it´s influence years ago in the 80´s. That is why there has been talk of energy reform, not to privatize it but to actualice Pemex.
14 British_Kirchnerist (#) Dec 24th, 2012 - 02:29 pm Report abuse
Not my ideal candidate, but Pena Nieto is certainly making better strategic decisions than the reactionary Calderon so far...

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