MercoPress. South Atlantic News Agency

Brazilian industry criticize agreements with China

Brazilian industry expressed concern Wednesday over a possible “invasion” of Chinese products following President Luiz Inacio Lula da Silva's decision granting the Asian giant “market economy” status.

"A political decision of this magnitude could be detrimental for Brazilian companies even if the government assures us there won't be losses", said Rubens Barbosa from the Sao Paulo Industry Federation.

Former Brazilian ambassador in Washington and London, Mr. Barbosa said domestic manufacturers are concerned China could flood the country with cheap products following President Lula da Silva's granting of market economy status during the recent five days visit by Chinese President Hu Jintao.

"If Brazil isn't careful, imports will increase and trade balance will become unbalanced" stressed Mr. Barbosa who pointed out that the World Trade Organization, WTO has yet to grant the "market economy" clause which means Brazil will not be able to appeal safeguards or sanctions against unfair competition from China.

Brazil posted a 2,4 billion US dollars trade surplus with China last year, but analysts say this could quickly be reversed by a surge of Chinese imports.

Brazilian toy, shoe and textile sectors most fear unfair competition from China, warned Mr. Barbosa.

"The leading developed countries have not recognized China as a market economy. In the accord signed (by Beijing) with the World Trade Organization, this status would be established in 2016. So we are kind of jumping quiet ahead" added the former ambassador and trade negotiator.

In exchange for market economy status, China pledged to pave the way for imports of Brazilian beef and poultry and to include Brazil on its list of approved tourist destinations.

However Brazil's industrial heartland in Sao Paulo released a communiqué criticizing President Lula da Silva's decision which leaves domestic industry "in a vulnerable position" vis-à-vis China, which was described as one of the world's leading unfair trade practices offender.