Chapter 4 An analysis of Brazil-Taiwan trade relationship
4.2 The impact of the Sino-USA trade war on Brazil-Taiwan relationship As trade in value between Brazil and Taiwan decreased, the top 10 products main from
4.2 The impact of the Sino-USA trade war on Brazil-Taiwan relationship As trade in value between Brazil and Taiwan decreased, the top 10 products main from Brazil to Taiwan suffer some changes. Instead of soy beans, mineral fuel became the most imported products that Taiwan is interested to buy from Brazil, which shows the shift of supplier of soy beans to Taiwan.
The trade relation Brazil-Taiwan has had a considerable and consistent decline over the last 5 years, except for 2017 with a small pick up on Brazil’s exportation to Taiwan but it continued to decrease even more in 2018 with Brazil accumulating larger deficit in trade with Taiwan. The supply of soybeans to Taiwan has also decreased and it became the second most trade products which from an unofficial diplomatic relation, losing market means losing relationship and influence in the country.
In the last year of 2018 and mid-2019 there were a few changes in the industry and trade between Brazil and Taiwan, at the Energy Taiwan 2018 trade show Brazil and Taiwan signed a memorandum of understanding to strengthen the Taiwanese investment in Brazil renewable energy which would boost the solar industry in Brazil, considering the irradiation of the northern part of Brazil favourable for the investment to be successful, as the low cost of solar production prevails it is considered a great time for Taiwan to invest in Brazil (Morgan, 2018).
A decrease of trade between Brazil and Taiwan could have happened also because the political decisions by Bolsonaro who visited Taiwan and had great intentions in developing deeper relationship with the nation, until November 2018 when Bolsonaro had a meeting with China’s ambassador to Brazil, Li Jinzhang. From this day the Brazilian president changed his words and attitude towards China, calling it a great cooperation partner and welcomed more Chinese investment and trade (Burton, 2018).
As a most recent event between the two countries, Taiwan’s computer company called Asustek Computer Inc (華碩電腦) launched its first laptop made in Brazil in June this year.
This technological company has invested in the Brazilian market to the extent of becoming the five best-sellers of smartphones in Brazil which from January to May of 2019, the company accumulated the revenue ofUS$4.15 billion (Taipei Times, June 27, 2019).
The relationship of Brazil and Taiwan is very sensitive due to the political tension with China, Brazil is very dependent on China and doesn’t dare to confront it and it is very worrisome for the Brazil-Taiwan relationship. However, from a just economic perspective
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Brazil isn’t losing so much for it is increasing exportation to China in great proposition as well as the exportation of soybeans which is the products mainly focused in this research.
Furthermore, Brazil and Taiwan relationship needs an improvement the sooner the better, might it be through business, trade, education or politics, one way or another in order to keep what was a stable relationship. The industry for the Taiwanese companies in Brazil seems to be succeeding year after year but on the contrary the Brazilian in Taiwan seems to be dormant.
4.3 Summary
The relationship between Brazil and Taiwan has been mainly focused on trade for at least the last two decades, over these years Brazil-Taiwan bilateral trade has oscillated in value but Brazil has always had a deficit in trade from the year of 2004 until the last year included in this research of 2018, even though Taiwan isn’t Brazil’s main trade partner it is important for both nations to keep a balanced bilateral trade as this is the main way to keep their relationship.
This bilateral trade relation is based on natural resources such as soy beans, petrol, grains, mineral and other natural products from Brazil and manufactured products as integrated circuits, devices and machinery from Brazil, the products traded between Brazil and Taiwan are very distinct and haven’t changed drastically recently. Both countries have imported and exported the same products though different percentage of it but Brazil has decreased a great value of exportation to Taiwan in the year of 2018, leaving a gap of US$ 1 billion of deficit.
The deficit of exportation is a threat to the relationship of Brazil and Taiwan if that is a matter of worry to any of these two countries, nevertheless there is always a tension of a country profiting more than the other, a perfect trade relationship might not be possible but a balanced trade is possible if well strategized.
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research, the gathering of dataset and some analysis, it is accurate to say this trade war had started long ago when probably no one was thinking of the trade advantage China has had over the years, it was a silent and sophisticated trade war which the current American president Mr Donald Trump had the boldness to stand against China and was the first and only one to fight China and place policies against it in order to bring a fairer trade relation mainly to the USA which will also affect other countries to pay closer attention of China’s attempt to have advantages over other nations.The puzzles of this research were concerned the effect of the Sino-US trade war on the relation between Brazil and Taiwan despite the fact that these two nations had no direct involvement in the trade war, nevertheless it could still affect their trade relationship due to the fact that Brazil is one of the largest China’s trade partner and Taiwan and China long lasting political conflict, the trade relationship of Brazil and Taiwan could be threatened since the relationship of these two nations is based on commercial exchange.
With the concern of Brazil-Taiwan relationship, it also arose the puzzle of whether there would be a side in the trade war that would have the most salient advantage and what would be the influence on other countries. In the case of the current Sino-US trade war which Donald Trump used economic sanctions to threat China, which worked to some extent as the sanctions in the way of taxation on Chinese products influenced China’s behaviour rather than China’s acceptance to all the imposition from the US, which was Trump’s expectation. And most importantly, there will not be a winner or loser in this trade war but a spill over effect of nations experiencing the consequences of this war, some with more profit than others.
In conclusion of this research, this current Sino-US trade war tend to affect the relation between Brazil and Taiwan because if China and the US keep fight and placing high tariff on each other’s products, both nations will quickly look for another potential market to export their products and import products with less tariffs, in the case of soy beans as Brazil and the US are the main soy beans exporter to China, the US will have to find another market which is very likely to be Taiwan and leave a gap in the import sector of this commodity in China, being so Brazil is already taking the opportunity to fill this gap in China but with the consequence of losing the market in Taiwan, as Brazil doesn’t have formal diplomatic relations with Taiwan, its only relations now is mainly commercial, meaning that weakening trade relation between
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Brazil and Taiwan might also affect the potential future closeness either diplomatic or economically speaking.
Nevertheless, this trade war facilitates a more profitable trade relation of Brazil-China as the gap in the Chinese market left by the American suppliers is now an opportunity for Brazil’s exportation to increase but it decreased the exportation to Taiwan, the likelihood of China’s influence on it is very low and it is more related to the lack of long term economic and trade strategy from both Brazil and Taiwan to keep consistent and strong ties, which with the data provided none of the two nations have made much effort to keep their ties strong and ongoing but Brazil has quickly shifted its exportation market to where it could profit the most and more quickly, that is China.
Taiwan as well as Brazil seems not to be making much effort to keep a fair trade and in order to have a steady commercial relationship, there must be a strong willingness from both sides to set long term commercial treaties and market openness from Taiwan for Brazilian products if there is any interest in having a steady and long-term relation with Brazil.
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