Chapter 4 An analysis of Brazil-Taiwan trade relationship
4.1 Brazil-Taiwan trade history
Chapter 4 An analysis of Brazil-Taiwan trade relationship
This chapter is divided in two parts, the first focused entirely on the history of the trade relationship between Brazil and Taiwan, a part of it is based on figures from 1997 to 2014 as the report from Ministry of Agriculture of Brazil published in 2015. Other information was extracted from MDIC in order to support the trade history with relevant figures of years of negotiation between Brazil and Taiwan.
The second part of this chapter addresses the impact of the Sino-US trade war on Brazil and Taiwan trade relationship as the core of this research is to find out whether Sino-US conflict affected Brazil and Taiwan relationship which could happen as three of the four nations studied here are highly crucial in the world trade of recent years.
4.1 Brazil-Taiwan trade history
Brazil and Taiwan, two very distinguished nations with their own particularities and in rather distant land from one another, yet these two nations are able to keep a healthy relationship. In the year of 2014, the Taiwan had a positive result in trade with Brazil at the amount of US$ 39.46 billion as the 22nd main nation to trade with Taiwan, considering international trade as an economical core for the nation. China is once again the main trade partner with Taiwan as well as to Brazil. In an analysis from 1997 to 2014, the greatest amount of importation from Taiwan to Brazil happened in 2008 totalling US$ 3.54 billion with a little of trade oscillation and a significant decline to US$2.8 billion in importation and US$1.6 billion in exportation by 2014 according to the Ministry of Agriculture (MAPA) report shown on Figure 4.1 (p.53).
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Source: Data from MAPA, 2014, pg. 3.
US$ Million
Export Import
Created by: SRI/MAPA Source: Brazil AgroStat from SECEX/MDIC
Figure 4.1 – Total Bilateral trade Brazil - Taiwan
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As Brazil mainly exported agricultural products to Taiwan in their bilateral trade relation, in 2004 there was a great decline on 40.6% amounting to US$1.3 billion less of exportation in relation to the year of 2012.
1n 2014, the Ministry of Agriculture listed the 3 main sector in exportation: Soy products (49.4%), grains, flour (34.7%) and fibre & textile (8.0%). By far soy beans is the most important product exported to Taiwan totalling US$ 379.61 million, therefore corresponding to 50.0% of all exported agricultural products to Taiwan. However, in the last few years the exportation of soy beans to Taiwan has decreased due to the supplying of soy beans from the USA, thus placing Brazil as the second soy beans provider to Taiwan. In the process of importation of soy beans, Taiwan didn’t keep the products but made soy oil of the beans and exported refined material to Japan and Hong Kong. In a situation where a country starts importing a lot more than exporting, that can lead to a continuous deficit as it happened to Brazil and it isn’t explicit why the decline happened with not only soy beans but other commodities too.
In Figure 4.2 (p.55) and 4.3 (p.56) point that soy beans had been a permanent most imported commodity from Brazil to Taiwan in a period of 10 years, even though there was a decrease of imported soy beans.
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Source: Brazil AgroStat from SECEX/MDIC Created by: SRI/MAPA
Soy beans
Fibre fabric and textile Coffee
Juice
Unspecified commodity
Others
Figure 4.2 – Brazil agricultural export to Taiwan (2005) Million
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Source: Brazil AgroStat from SECEX/MDIC Million
Created by: SRI/MAPA
Soy beans
Fibre fabric and textile
Others Coffee
Wheat & flavour
Sugar & ethanol complex
Figure 4.3 – Brazil agricultural export to Taiwan (2014)
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The decrease of commodities from Brazil to Taiwan was due to the increase of non-agricultural product such as iron ore which dropped from US$1.04 billion in 2012 to US$
914.46 million in 2014 (-12.2%), other materials were sawn wood, cast iron, cattle leather and copper ore (MAPA, p.8)
As for Taiwan, its exportation to Brazil is focused on material for telecommunication and electronic companies in Brazil, 1/3 of all export to Brazil summing US$ 790.02 million only in integrated circuit, as well as parts devices US$ 155.92 million, polyacetals US$ 94.63 million, fibre fabric US$81.43 million, textile fibre US$ 75.51 million and telephone devices US$ 74.06 million (MAPA, p.10). In 2014 Taiwan imported US$13.4 billion from the agribusiness sector, 5.4% more than 2011 being so Brazil had 7.7% of the Taiwan market in agricultural products (MAPA, p.11), the main products were grains totalling US$1.73 billion, corn and soy beans US$ US$1.35 billion and meat US$1.17 billion.
At present moment, Brazil is the 36th exporter to Taiwan, which up to April 2019 it has represented only 0.63% of the Brazilian exportation and the 14th importer in the Brazilian trade ranking totalling 1.4% of the country’s importation (MDIC, 2019).
The recent relation between Brazil and Taiwan is based on mutual visits to deal with economic and trade matter represented by their officials as their relationship is based on bilateral relations and Taiwan expressed its interests to “deepen our substantive economic and trade ties” with Brazil (MOFA Taiwan).
The governmental organisation International trade in Brazil (Comércio exterior do Brasil-COMEX) which is also responsible for the control of import and export in Brazil published Taiwan’s statement in 2014 officialising the importance of Brazil-Taiwan trade partnership totalling almost US$ 17 million.
In 2017, Taiwan put up some extra effort and emphasised its intention to strengthen the relation with Latin America trade wise, which included Brazil even though the diplomatic tie isn’t official. The trade relation between Brazil and Taiwan hasn’t been as successful as for 2016 and according to MDIC Brazil exported US$ 1.4 billion, slightly less than the year before which was US$ 1.5 billion. But in 2018 there was a great decline of exportation to Taiwan summing up to US$ 1.1 billion and imported US$2.1 billion resulting in a deficit to Brazil of US$1 billion, a drastic change when both nations attempted to get closer through trade and business but instead it became weaker over time. To have a better understanding of trade between Brazil and Taiwan, refer to Figure 4.4 (p.58) to compare importation and exportation figures from 2007 to 2018.
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Figure 4.4 – Brazil and Taiwan trade (2007-2018)
Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in Febraury 2019
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In 2017 the two main Brazilian products exported to Taiwan were soy beans representing 21% and crude petroleum 16% of it all, in the meantime the two main Taiwanese products exported to Brazil were integrated circuits and microcontrollers 32% of all exports and transmitting or receiving devices with 9.7% of exports to Brazil, refer to Figure 4.5 (p.60) and 4.6 (p.61) for the list of the most traded products between the two nations in the year of 2017, which is better detailed with the 10 most traded products. While Taiwan exports its manufactured products to Brazil and Brazil mainly exports its agricultural products and is losing market in Taiwan, as previously shown on Figure 4.4. The supply of soy beans decreased to 12% while mineral fuel became the most imported product to the island totalling 22% of all imports from Brazil, Figure 4.7 (p.62) and 4.8 (p.63) cover the updated list of most traded products in the year 2018 as trade between the two countries decreased.
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Figure 4.5 - Brazil Top 10 imports from Taiwan (2017)
Source:Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in December 2018
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Figure 4.6 - Brazil Top 10 exports to Taiwan (2017)
Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019
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Figure 4.7 - Brazil Top 10 imports from Taiwan (2018)
Source: Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019
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Figure 4.8 - Brazil Top 10 exports to Taiwan (2018)
Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019
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4.2 The impact of the Sino-USA trade war on Brazil-Taiwan relationship