16 th Joint Meeting of Brazil-Japan Economic Cooperation Committee Carlos Mariani

1. 16th Joint Meeting of Brazil-Japan Economic Cooperation Committee Carlos Mariani National Confederation of Industry

2. Bilateral Trade in perspective: balanced numbers • Fast and sustainable growth during the last decade • Decline in 2012, specially due to Brazilian exports prices of basic products • Bilateral trade in 2013: growth in exports (+8%), but imports declining (-15%)

3. Trade composition: What changes can we expect in the short term? Brazilian exports to Japan Brazilian imports from Japan

4. Japanese companies: important investors in Brazil 2011 – 2012 investment announcement US$ 4 billions (Acquisition of Schincariol) Japanese Foreign Direct Investments in Brazil US$ 1,2 billion (joint venture in Australia) 2011– 4th largest investor (US$ 7.6 billions) 2012 – 10th largest investor (US$ 1.5 billion) US$ 1 billion (New factory in Goiás) US$ 50 millions (expansion of factory in São Paulo)

5. Trade and investment complementarities between both economies remain But, what has advanced and what’s missing to advance more?

6. Some issues on trade and investments have advanced • Transfer Price legislation in Brazil: • A new law passed in 2012 defining calculation methods for Transfer Price. Japanese companies with investments in Brazil were very active. • Pork meat from Santa Catarina: • Meat exports started to be shipped this year. • Digital TV standard: • More countries adopted Brazilian-Japanese digital TV standard.

7. Ways to advance more To strengthen and work on a clear bilateral agenda of obstacles and opportunities to increase trade and investment EPA Advantage:shorten results Disadvantage: limited results Advantage: very broad market access coverage Disadvantage: sensitive issues for both sides

8. Reasons to discuss an EPA Broad scope of trade, investment and cooperation Multiplication of bilateral agreements Japan and the Transpacific Partnership (TPP) Need to diversify exports to Japan and intra firm trade Global and regional value chains Question: Does Brazil and Japan see each other as strategic partners for an Agreement?

9. Brazilian strategy for trade agreements: Is it time to change? Is Japan on the list? • Brazil and Japan: low market-access agreements currently in force • Concerns about Brazil’s economic isolation

10. MERCOSUL – European Union Status Countries are finalizing their lists of goods to exchange with European Union, probably in the end of the year; Flexibility to negotiate MERCOSUR shall continue to be the institutional structure for Brazil to negotiate, but the tariff reductions of MERCOSUR’s new agreements can occur in different speeds in order to advance extra-regional negotiations. There are already precedents.

11. The feasibility of EPA needs a comprehensive evaluation from CNI and KEIDANREN.

12. Issues affecting trade and investment between Brazil and Japan Demands from Brazil • Tariff issues: sugar, ethanol, metal, wood and furnitures, processed food, fruit and vegetables, fish, processed soybeans • Non tariff issues: bovine, poultry, fresh fruit. • Biofuels: Ambitious policies in Japan to stimulate the use of biofuels in its energy matrix. • Trade facilitation cooperation (single window, for example) • Subsidies: avoidance of subsidies in aircraft industry.

13. Issues affecting trade and investment between Brazil and Japan Demands from Japan • Infrastructure: stable and predictable regulation in infrastructure projects; • Taxation: Other taxation issues inside Brazil; • Biofuels: stable domestic policy for biofuels in Brazil; • Visa requirements for business, researchers and students (important issue for both sides).

14. Conclusions: Trade and investment relations are mature. But need to revert the recent fall trend; There is room for more private and public sector engagement to strengthen and work on a systemized business agenda; A serious discussion on a free trade agreement between Mercosul and Japan needs to assess its feasibility.