Brazil in Davos: President Bolsonaro will defend reforms and trade liberalization

Photo: Adriano Machado - Reuters

The Brazilian President Jair Bolsonaro will outline his government’s economic reform agenda and plans to increase trade with the rest of the world during his speech at the World Economic Forum’s Annual Meeting in Davos today.

Bolsonaro, a far-right former Army captain who took office on Jan. 1st vowing to end years of graft and crack down on violent criminals, will also pledge to lower rampant bureaucracy in Brazil, which many view as a drag on the country’s stuttering economy.

Bolsonaro’s 40-minute speech is scheduled for Wednesday, and he will also highlight efforts to simplify the economy, while pledging to give legal certainty to investors and defend the rule of law.

Bolsonaro is also expected to comment on the situation in neighboring Venezuela, which is undergoing an unprecedented crisis and growing international pressure against the regime of President Nicolás Maduro.

A long-standing critic of Maduro, Bolsonaro has ruled out military action to overthrow the current government, but said last week that a solution for Venezuela will come “briefly,” without giving details of how that would happen.

On his return from Davos, Bolsonaro will settle on a model for its pension reform proposal, his chief of staff, Onyx Lorenzoni, said on Tuesday.

Sources: Agência Brasil, Reuters

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Presidential poll in Brazil: Lula's candidate Haddad emerging second behind the far-rightist Bolsonaro

In order: Bolsonaro, Ciro Gomes, Marina Silva, Alckmin and Fernando Haddad - Photo: "O Globo" Archives.

Brazilian far-right presidential candidate Jair Bolsonaro held a solid lead ahead of the October 7th election following a serious stabbing suffered during a popular rally 10 days ago. However, Workers Party (PT) candidate Fernando Haddad emerged in second place, signaling a potential polarized right-left runoff, a poll (CNT/MDA) showed this Monday morning.

Bolsonaro, who is in the hospital and unable to campaign, has 28,2% of voter support, according to the survey by pollster MDA. Haddad, who replaced imprisoned former President Luiz Inácio Lula da Silva on the ticket last week, had 17,6% in his first showing in an MDA poll.

Haddad’s numbers indicated that Lula, banned from running due to a corruption conviction, was successfully transferring his support to the former São Paulo mayor, who is well placed to face off with Bolsonaro in the second round in late October.

Center-leftist Ciro Gomes had 10,8% of voter intentions and business-friendly candidate Geraldo Alckmin was fourth with 6,1%, while environmentalist Marina Silva trailed with 4,1%.

Perspectives to a posible Runoff

In a runoff, which would be triggered if no candidate wins half of the valid votes, Bolsonaro would defeat all other candidates, except Ciro Gomes, with whom he is statistically tied (37,8% for Ciro, against 36,1% for Bolsonaro), MDA said.

One in four voters are still undecided or say they will annul or leave their ballot blank in Brazil’s most uncertain election in a generation.

Other polls published last week showed Bolsonaro losing a runoff against most other candidates.

The nationwide MDA survey of 2.002 people was carried out for the transportation sector lobby CNT (National Confederation of Transport) between September 12th and 15th and had a margin of error of 2,2%, meaning results could vary that much either way.

Sources: Mercopress Agency, Reuters, Investing.com

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Why Convicted Former President Lula Showed in Surveys for Presidential Election?

Why Convicted Former President Lula Showed in Surveys for Presidential Election?

Photo: correio.rac.com.br

For the eyes of a foreigner it is out of the rational to understand how a convicted person could run for president as his name was appearing in all political surveys as a candidate.

To better explain that, it is correct to point out that this was all, in fact, a script of a theatrical piece that could only be played due to the institutional gaps that fulfill the Brazilian judiciary system.  

In other words, it’s the gaps co-existing among the timetable of the interpretation of a law and the rule of a normative that makes this scenario possible.

The first true is that Lula cannot run for president in compliance with the country’s Clean Record Law, which bans the candidacy of individuals convicted by an appellate court. He has been in jail since April 7 and was sentenced to 12 years and one month in prison for corruption and money laundering.

The second true is that Lula appeared on the polls only because polling firms had to put him there and this happens because Lula’s Workers’ Party registered him as their candidate.

Better explaining, it was possible to register him as candidate because there is a normative resolution of the Brazilian Superior Electoral Court in Brasilia (TSE, acronym in Portuguese), which requires all candidates registered to be put on presidential surveys.

But how the Workers Party got permission to include Lula’s name as a registered candidate? Because this is how things are in Brazil. First you do the wrong, then someone has to call for the wrong and contest his election candidacy to the Electoral Court. The Court will then judge, and if the wrong is proved, then his candidacy will be removed.

By last Thursday, August 30^th, there were more than 15 requests to cancel Lula’s registration as candidate.

Between the lines, the Worker’s Party was counting with the laziness of the Brazilian judiciary system. The most promised schedule for TSE judge the case was the date of September 17. Meanwhile the Worker’s Party want to gain public notoriety that Lula could win the election once more and this enforces their interpretation of coup d'etat.

This scenario was just not confirmed because the court ruled on Friday, August 31^st,  that former President Luiz Inácio Lula da Silva cannot run for a third term.

But, would Lula really win the Elections? The first run, definitely. He has been shown with 37% of the electored, i.e. people that votes on him with wrongdoings or not. The second run? Hard to say. There is a great part of the population that rejects to vote on him. Still, it would all depend on the course of the election campaigns over these couple of months to come before election day.  

Quorum Political Strategy is a government relations consulting firm made up of experienced professionals who can help your organization achieve its goals. We are a result-oriented consulting firm. Do not hesitate to contact us.

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Political Analysis Serie - US-China Trade War: Temporary opportunities to Brazilian Agribusiness Sector

Photo: France Presse Agency

The Overview

Last 6th July, US President Donald Trump announced tariffs of US$ 34 billion on Chinese imports. It was the harshest measure in a global trade dispute between big nations recorded in recent years. On that occasion, China said it would be forced to retaliate imposing higher levies on goods that would ranging from American soybeans to pork. And the promise was fulfilled.

“The United States has violated World Trade Organization rules and ignited the largest trade war in Economic History,” China's Commerce Ministry said in a statement. “Such tariffs are typical trade bullying, and this action threatens global supply chains and value chains, stalls the global economic recovery, triggers global market turmoil, and will hurt more innocent multinational companies, enterprises and consumers”, said that Chinese official.

Thus, over the past week, US tariffs on $34 billion in Chinese products effectively went into effect. China responded by slapping 25% duties on the same amount in US goods. The trade war between the two nations had begun. As a new response, Trump's administration released last Tuesday its list of $200 billion worth of Chinese goods that it said it aims to subject to 10% tariffs following a review process. In counterpart, China threatened retaliatory action and pledged that it would lodge a complaint with the World Trade Organization.

The riskiest economic gamble of Trump's Presidency could spread as it enters a new phase by imposing direct costs on companies and consumers globally.

Beijing noticed that the US side had threatened to impose additional tariffs forward gradually should China take retaliatory measures. However, Chinese authorities want to demonstrate that this logic of trade intimidation will not make them flinch. For this purpose, in a tactical logic of time, China will have no choice but to consolidate other markets for its products and expand relations to alternative input providers during the “conflict”.

The Quorum’s View: during the conflict – and only during that time -, opportunities for the Brazilian Agribusiness Sector

In the Agricultural Raw Materials sector - if Beijing really wants to demonstrate its resistance to the trade war from Washington -, China will have to increase soybean imports from other countries to reduce reliance on buying from the United States.

Soybeans, crushed to make cooking oil and the protein-rich animal feed ingredient soymeal, were the biggest US agriculture export to China last year at a value of US$ 12,3 billion, according to the US Department of Agriculture (USDA). China, which imports 60% of the soybeans traded worldwide, bought 32,9 million tons from the United States in 2017, accounting for 34% of the total purchases.

For this reason, showing concern on the trade war with the United States, the President of Chinese State Grains Trader (COFCO) Yu Xubo already said in an interview with the Communist Party’s official People’s Daily Paper last Wednesday that hefty import tariffs applied by Beijing on American goods, including soybeans, will inflate costs for Chinese farmers and potentially increase internal retail prices of foods, like pork, the nation’s favorite meat.

Thus, China could increase soybean imports from South American countries amid an escalating trade dispute with the United States. Beijing can also buy more rapeseed, sunflower seeds, and bring in more soybean meal, rapeseed meal, sunflower meal and fishmeal to fill any supply gaps. Increasing meat imports would be also an option.

In this regard, the trade conflict between Beijing and Washington is already boosting grain and oilseed exports from the Black Sea region, where major sellers including Russia, Ukraine and Kazakhstan are looking to sell more corn, wheat and soybean to the huge Chinese market. However, the isolated capacity of global offer of these regions is limited. For example, a Rabobank report said last week it reckoned China will have to buy 15 million tons of US beans with the new tariff this year because there aren’t enough alternative sources of beans from other major exporters.

That’s why Brazil could indirectly benefit from the intensifying US-China trade war. The South American country finds itself in a strategic position to increase its market share of soybean exports to China. The other major producer, Argentina, is not in much of a position to offer competition this year. Soybean production there has been hammered by poor weather conditions that mean its crop is expected to be the lowest in a decade.

This leaves the field open to Brazil as the main supplier of soybeans and at more competitive prices than the other options available on the market. Meanwhile, the weakness of the Brazilian currency enhances farmers’ margins when compared with the more expensive US grains that, despite the drop in prices caused by the US-China trade dispute, are still not as attractive.

However, there are doubts over how quickly Brazil will be able to react to the new trading situation in the aftermath of a Truckers Strike protesting high fuel costs that halted transport of cargoes to ports for more than two weeks. In fact, regular loadings of cargoes at most ports weren’t impacted in the short term as the grains being sold were old crops stored in silos located near the port facilities. But it’s also true that Brazil still has structural problems in the logistics field and its freight costs are higher than the US and more sensitive to price shocks derived from increased demand.

All this involved, its possible to affirm that Brazil will have comparative advantages in its capacity to offer agricultural raw materials to China in this trade war environment against US. However - sooner or later -, once re-established the regular trade relations between Washington and Beijing, Brazil will lose these advantages and should be ready to readjust its volume of offers on the raw materials global markets. The evaluation of the correct moment to initiate this readjustment will depend on help of a good staff of analysts with focus on the changes of geopolitical scenarios to the global commodities sector.

Quorum Political Strategy is a government relations and political risk consulting firm made up of experienced professionals who can help your organization achieve its goals. We are a result-oriented consulting firm. Do not hesitate to contact us.

Sources: The Wall Street Journal, BBC, Mercopress Agency

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Political Analysis Serie - Pre-salt auctions and oil sector in Brazil: opportunities and risks

Photo: Repsol Agency

The Overview

Very recently, on June 7, the Brazilian National Oil, Natural Gas, and Biofuels Public Agency (ANP, in Portuguese) sold three of the four blocks offered as part of the fourth pre-salt auction. Bonuses added up to US$ 807,7 million. The deep waters pre-salt oil reserves discoveries in Brazilian coast are among the most important made in the world over the last decades.

The most coveted block and the first to be won — called “Uirapuru”, on Santos basin — was won by a consortium formed by the Brazilian State-owned Petrobras (30%), Portugal’s Petrogal (14%), Norway’s Statoil (28%), and ExxonMobil (28%). The bid surpassed the 22,18% minimum set for the auction. The premium stood at 240,3%. The signing bonus was US$ 679,5 million.

Brazilian authorities stated that with a profit oil of 75,49% for “Uirapuru” block, the Brazilian Government is likely to receive 90% of the project’s net revenues. These are values hardly ever seen, including in auctions for blocks in the Middle East. Deducting companies’ investments and costs of the projects’ net revenues, 90% will go to the Brazilian Treasury.

Also located on Santos basin, the “Três Marias” block attracted two bidders. The winning consortium is formed by Shell Brasil (40%), Chevron Brazil (30%), and Petrobras (30%). In turn, the “Dois Irmãos” block, on Campos basin, was won after a single bid by Petrobras (45%), BP Energy (30%), and Statoil Brasil O&G (25%), with a zero premium and a percentage of 16,43% of oil handed over to the government. The signing bonus stood at US$102,56 million. On the same basin, the “Itaimbezinho” block got no offers.

ANP has set the deadline for the payment of signing bonuses for September 28. The bonus is based on the market’s expectations on the production potential of the blocks on sale and the degree of competitiveness in the area auctioned. Contracts are to be signed by November 30.

In all, the Brazilian Government expects to receive US$ 5,82 billion in proceeds from licenses and concessions.

The Quorum’s view: Oil sector in Brazil - a good opportunity, with its risks involved

Despite the institutional instabilities in the Brazilian society in recent years, the future of the Brazil’s Oil sector – and, by extension, of its general economy – is positive in a long-term. Consequently, foreign investors willing to opperate in this sector should be capable to accept “ups and downs” in the short-term.

Oil and Natural Gas sector accounted for 11% Brazil’s GDP in 2017 and the perspective is the continuity of this growing. With a recovered economy in the future (and the permanence of the economic and political collapse situation in Venezuela), Brazil has a strong chance to mantain its position as the largest oil producer in Latin America. In this scenario, pre-salt will be one of the most promising oil reserves in the world. 

The Brazilian Government expects the auctions related to pre-salt basins to yield investments of about US$ 36 billion for the next 10 years, and would create about 500.000 direct and indirect jobs. This development in the oil sector would provide an optimistic outlook for many Brazilian states’ economy that depend on oil production, such as Rio de Janeiro, Espírito Santo and São Paulo states. This sector recovery could invite more economic development in Brazilian states that have suffered from the recent dire economy.

However – despite advances made by “Lava Jato” investigations –, corruption, fraud, and bribing will remain real problems in Brazil in the next few years. Nevertheless – to atract foreign investments to the sector –, the Brazilian administration is concerned to reinforce regulatory and economic laws to mitigate these risks in the oil and gas industry.

Thus, despite the positive developments in the oil sector, there are persistent political risks that investors must consider. These risks include excessive jurisprudencial changing in the Brazilian judiciary system, reputational damage related to the interaction to the high-level corruption, political intervention with the involvement of Petrobras and impositive contract changes. For instance, the effects of the Truckers’ Strike on the pricing policy of Petrobras (that become partly controlled after the Strike), two weeks ago, caused the resignation of Pedro Parente, chairman of that State-owned (who advocated for a policy of free prices fluctuating in according to international markets). These events provides a cautionary tale for investors who seeking short-run profits, as judicial and political insecurity can undermine the business environment. Along with these issues, the upcoming presidential elections on next October could reverse policies and new regulatory framework for oil sector.

All in all, it’s necessary to say that the Brazilian energy sector (in special, its oil industry) usually creates great opportunities of profitability to patient investors with capacity of short-run resilience and a strategic approach to deal with Brazilian way of doing business.  To foreign investors, a robust strategy to the Brazilian markets involves a learning process related to the political and corporate local cultures which permits the identification of opportunities with the risk mitigation. In this field, the accompaniment of a specialized team on political risk analysis (with focus on Brazil) can be a strong watershed between the success and the failure.

Quorum Political Strategy is a government relations and political risk consulting firm made up of experienced professionals who can help your organization achieve its goals. We are a result-oriented consulting firm. Do not hesitate to contact us.

Sources: Agência Brasil, Agência Nacional do Petróleo - ANP

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After losses related to Truckers' Strike, CEO of Brazil state-run oil firm Petrobras resigns

Photo: Sergio Moraes/Reuters

The Chief Executive of Brazil´s state-controlled oil giant Petrobras, Pedro Parente, decided to step down from his post Friday (June 1). The decision was made public in an urgent announcement to the market. Parente met with President Michel Temer at the Planalto presidential palace.

The statement released by Petrobras says that “the appointment of an acting CEO will be considered by the firm’s managing board later today. The remaining members of the company’s board of executives will not undergo any changes.”

At 11:20 am, after Parente’s decision to resign was made public, a plunge was observed at the São Paulo stock exchange. The firm also reported that the trading of its PETR-N2 shares was suspended from 11:22 to 11:42 am, but was subsequently resumed.

Surprise

Petrobras Chief Executive quit this Friday is a surprise move that wiped some $12 billion off the state-controlled oil producer’s market valuation, after Brazil’s government responded to a trucking strike by intervening in the company’s fuel pricing policy.

Pedro Parente, who in two years in the job had succeeded in slashing Petrobras’ debt and restoring it to profitability, said in a resignation letter to President Michel Temer it was clear after the last week’s turmoil that new talks would be needed on pricing policy.

“Given this situation, it has become clear that my remaining as CEO of Petrobras has stopped being positive and will not contribute to the alternatives that the government must consider going forward,” Parente said in the letter.

Shares in Petrobras, Latin America’s biggest oil producer, plummeted as much as 15 percent in afternoon trading, wiping some 45 billion reais ($12 billion) from the company’s capitalization and pushing Brazil’s wider Bovespa index into negative territory. The real currency weakened as much as 1 percent against the dollar. Petrobras bonds also fell.

Still, his resignation appeared to have taken Temer’s already beleaguered government by surprise. A senior presidential source told on Thursday that no such move was expected.

Truckers’ Strike Impact

A key plank of Parente’s turnaround campaign for the company and a condition for his taking the top job in 2016 was freedom to control fuel prices. He sought to align those more closely with international markets through nearly daily price adjustments.

But on Sunday Temer, governing with rock-bottom approval ratings, announced plans to placate the striking truck drivers - who were protesting the high cost of diesel - by freezing fuel prices on a monthly basis and taking other measures to bring domestic diesel prices down.

Truckers have gradually returned to work since then, after a protest that left gas stations and some airports without fuel and supermarket shelves bare.

“The policy (Parente) put in place was the scapegoat of this whole crisis,” said Roberto Castello Branco, a former Petrobras board member, arguing that Temer’s weakened government must have asked Parente for changes he could not accept. “The pressure on him was enormous.”

“Terrible Administrator”

While investors and oil industry insiders bemoaned his departure, others rejoiced.

“Parente was the most responsible for the crisis that Brazil has faced with the trucker strike,” the truckers lobby said in a statement. “Nothing justifies the abusive diesel prices put in place by the company in the last few months.”

Petrobras oil workers, who walked off the job earlier week in part to demand Parente’s dismissal, also celebrated.

“Pedro Parente, you will go down in history as a terrible administrator, who took gasoline away from Brazilians,” Jose Maria Rangel, leader of FUP, Brazil’s largest oil workers union, said in a video message. “You don’t deserve to walk through the doors of Petrobras again.”

Parente’s departure comes days before Brazil hopes to attract foreign oil companies to bid on oil fields in its coveted “presalt” exploration areas and leaves in limbo several of his key priorities, including selling major refineries.

Also unresolved is a long-running dispute with the government over an oil-rich offshore area, which could represent a windfall for Petrobras if a deal is reached.

Sources: Agência Brasil, Reuters

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Brazil National Truckers Strike: Government says a truce has been reached, but roads are still blocked

Photo: Everaldo Silva/Futura Press/Folhapress

Brazil's Government said late Thursday that a deal had been reached with truckers to suspend a four-day-old strike that caused fuel shortages, cut into food deliveries, backed up exports and threatened airline flights.

Eliseu Padilha, Chief of Staff for President Michel Temer, told reporters in Brasília that several unions that represent truckers agreed to suspend the strike for 15 days to give all parties time to negotiate a solution to rising fuel prices that drivers say has cut deeply into their earnings. The deal came after a full day of negotiations with several of the largest transportation unions. But it wasn't immediately clear how many of the thousands of truckers, who by the nature of their jobs operate with a good bit of independence, would heed calls to stop the strike.

Brazil's economy runs largely on road transport and the strike to protest rising diesel prices was beginning to have serious consequences, with highway police reporting blocked roads in nearly all of Brazil's states.

The airport in the Capital of Brasilia allowed landings only by planes that carried enough fuel to take off again. The stop-gap measure hadn't resulted in any flight cancelations, but it was unclear how long it could continue before companies would have to ground planes. The civil aviation authority and airport authorities said they were monitoring fuel supplies carefully.

Long lines formed at gas stations, and some ran out of some kinds of fuel. In Rio de Janeiro, only about two-thirds of the city's buses were running Thursday, according to Rio Onibus, which represents the companies that run the various lines.

Local media reported food shortages and rationing in some supermarkets, and an association of supermarkets in Brazil's south warned that perishable food would run out in days if the strike did not end. The association said stores on average have a 15-day supply of dry goods, but fresh food would run out or spoil before then.

The Brazilian Association of Meat Industry Exporters said dozens of meatpacking plants were idling because of the strike, and 1,200 containers carrying beef for export were not being loaded on ships each day. Brazil is one of the largest exporters of meat in the world.

Truckers complain that rising diesel prices have cut deeply into their income and are demanding relief from the government. Diesel prices are being pushed up by rising world oil prices and Brazil's falling real currency.

On Wednesday night, the Lower House of Congress rushed through a bill to eliminate a tax on diesel through the end of the year. But the Senate still had to approve it.

Truckers rejected the Wednesday decision by the state oil company Petrobras to reduce diesel prices at refineries by 10 percent. The company said the measure would last for 15 days and give the Government time to negotiate an end to the strike.

“The government thinks truckers are illiterate and can't count,” said Vicente Reis, who has been driving for 20 years. ”In 2018, there has already been about a 25% increase in fuel prices. And now they want a 15-day freeze with (a reduction of) 10%. Truckers know how to count, Mr. President”.

Despite of Government announces about an alleged truce, Federal Highway Patrol authorities informed this Friday morning that the roads are still blocked throughout the country. Meanwhile, Brazilian Federal Police investigates whether the truckers strike is, in reality, a lockout orchestrated by businessmen from the logistics sector. Unofficially, Federal Government considers to use Armed Forces troops to liberate the highways.

Sources: Agência Brasil, Mercopress Agency

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US suspended aluminum and steel tariffs for Brazil and other allies

US Trade Representative Robert Lighthizer this Thursday at the Senate Finance Committee (Kevin Lamarque - Reuters)

Some of the United States’ closest trading partners will receive a temporary reprieve from tariffs on aluminum and steel imports, the top US trade official said Thursday, a day before the measures were set to begin. The curbs were expected to be imposed on Friday (23rd March), two weeks after Trump’s signature.

The decision was sure to relieve anxious U.S. partners, even as it raised questions about whether the tariffs would be able to protect US metal industries. Brazil, Argentina, the European Union, South Korea and Australia are on the list US Trade Representative Robert Lighthizer announced at a Senate hearing. Canada and Mexico already had been exempted.

World leaders had subjected Washington to a furious lobbying effort to remove the tariff, announced by President Trump earlier this month, warning of a trade war and saying that they did not see why long-standing military allies should face the import taxes on national security grounds, the professed basis for Trump’s action.

“The idea that the president has, is that based on a certain set of criteria, that some countries should get out,” Lighthizer told the Senate hearing. “What he has decided to do is to pause the imposition of the tariffs with respect to those countries.”

Lighthizer said Wednesday that he expected that negotiations about permanent exemptions to the tariffs would be resolved by the end of April, creating pressure on the countries to reach a deal with Washington on measures that would satisfy Trump’s desire to improve their trade relationships with the United States.

Following the exemptions, the countries that will be hit hardest when the steel tariffs take effect Friday will be Russia, Taiwan and Turkey.

Temer: US will start “negotiations” with Brazil

In an announcement made Wednesday (21st March), Brazilian President Michel Temer said the US would start negotiations with Brazil over the new import tariffs on steel and aluminum. While talking about the measure, unveiled in a note by the US government just at that moment, Temer said the new tariff will not be introduced before negotiations are brought to an end.

“I’m looking at a declaration by the White House saying that Brazil is one of the countries with which negotiations are to begin with a view to waiving import tariffs on steel and aluminum. The new tariffs, the message from the White House says, will not apply until conversations are held on the topic. Good news,” the Brazilian President said, during a meeting with the Economic and Social Development Council (CDES).

On Tuesday, Temer talked to a representative from Brazil’s steel-producing industry. In the conversation, the President availed himself of arguments to convince US President Donald Trump to exempt Brazil from the new tariff.

Sources: Agência Brasil, Reuters, The Washington Post

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Brazil plans to negotiate US steel tariffs

Brazilian Finance Minister Henrique Meirelles said that the country is to consider talks with the US on the 25% tariffs on imported steel, a measure signed Thursday (Mar. 8) by President Donald Trump.

“The Government signed that; it should be in effect in 15 days, but they’re saying they’re open to negotiation. We just have to know what sort of negotiation this is; what they’re willing to negotiate. The issue will be considered bearing in mind what Brazil has to win or lose,” Meirelles said in New York, where he is taking part in an event aimed at drawing foreign investment to Brazil.

In his view, the decision made by the US Government is detrimental to all parties involved. “It benefits steel production and protects the employment of a group of workers in steel-producing companies. But it’s harmful, it takes the jobs of industrial companies using steel or aluminum; companies that lower their international competitiveness for having more expensive supplies.”

The Brazilian Government released a note last Thursday (8) stating that the decision by the US Government should cause “significant losses” in Brazil, and make an impact on “trade and investment ties between the two nations.”

Altogether, 32% of the steel exported by Brazil is bound for the US, which makes Brazil second only to Canada in steel exports to the US. In 2017 alone, 4.7 million tons of Brazilian steel were shipped to the US, which totaled $2.6 billion in revenues.

Trump's tariffs could ricochet on US coal country

Metallurgical coal — or “met coal” — is low-ash, low-sulfur coal that’s used to produce coke, an essential fuel for steel-making.

 Demand for met coal is tied to the demand for steel. It’s also an American export and a symbol President Donald Trump used often on the campaign trail.

Last week, Brazil reminded US officials that it’s the biggest buyer of American met coal – about $1 billion worth last year – in a statement expressing concerns over the tariffs.

Latin America’s largest economy imported nearly 5.2 million tons of US met coal through September of last year – about 1.3 million more than the next highest consumer, Japan, according to the U.S. Energy Information Administration.

The Brazilian statement also pointed out that US and Brazilian steel industries are not competitors, but are integrated and complement each other. “Approximately 80% of Brazilian steel exports are semi-finished products that are used as inputs in the US steel industry. Moreover, Brazil is the largest buyer of metallurgical coal from the United States, chiefly for the manufacture of Brazilian steel for export to the United States” said the note.

Brazil also said it would not rule out retaliating against proposed tariffs. Similarly, a European Union trade leader has threatened to impose tariffs on US made products like steel, cars, orange juice and Kentucky bourbon.

Sources: Agência Brasil, Ministry of Foreign Affairs of Brazil.

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Temer presents a “softer” Pension Reform bill hoping for its "quick approval"

Photo: Beto Barata/PR

A new version of Brazil’s unpopular Pension Reform bill presented last Wednesday will suggest “softer” rules for retirement and social security contributions, according to a draft of the legislation that the Government hopes will win approval in Congress.

The new bill will require a minimum of 15 years of contributions from private sector workers, compared to 25 years in the previous draft bill and 15 currently. Public servants would have a 25-year minimum, and all workers would need to work 40 years to retire on full pension.

The bill maintains the minimum retirement age of 65 years for men and 62 years for women, a key proposal for reducing the cost of Brazil’s pension system.

Pension reform is the cornerstone policy in President Michel Temer’s efforts to bring the deficit under control, but he lacked the votes to get a tougher version approved by lawmakers who worried the unpopular measures would hurt their re-election chances next year.

Temer used political capital blocking corruption charges that further undermined support for his policies and delayed a pension reform vote in Congress by six months.

The revamped bill maintains the same retirement rules for rural workers that are in effect now, dropping proposals for tighter standards.

In the current bill, rural workers will contribute for 15 years to get a pension, 10 years less than the Government’s initial proposal. The minimum retirement age for female and male rural workers will be kept respectively at 55 and 60 years, the same as today, according to the draft.

The Government restored a guarantee that disabled or elderly people unable to support themselves would receive an additional amount so their total payment meets a monthly minimum,

The speaker of the Lower House of Congress, Rodrigo Maia, warned this week said that the government did not have the 2/3 majority of votes needed to pass a Pension Reform.

Maia said the government should work to strengthen its base first, which Temer sought to do on Wednesday by swearing in Alexandre Baldy to head the Ministry of Cities, a move designed to please the Baldy’s Progressive Party (right wing), which has 40 seats in the chamber.

Source: Mercopress Agency

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