Foreign trade

Made in Brazil

How the soft power, the diplomatic and cultural capital of a country, can be considered a competitive advantage for Brazil in an environment of uncertainty in international negotiations.

By Vinícius de Oliveira

April-June | 2017

When the Carne Fraca operation was triggered, in March 2017, to combat alleged fraud in more than 30 companies of the meat processing sector, it was possible to have an idea of how business and diplomacy go hand in hand. To contain the tide of beef import suspensions from some important partners, such as Hong Kong, China and the European Union, the issue quickly sparked alert in the Federal Government, which triggered the embassies around the world. At stake, was the sector’s reputation, which exports US$12 billion per year, according to data from the Brazilian Foreign Trade Association (AEB).

The movement continues to happen and it moves the tiles from the international trade board. Doors that threaten to be closed to Brazil make enough noise to attract the attention of direct commercial rivals, such as Australia, United States and Argentina. This is only a sample of what globalization is capable, according to Rubens Barbosa, former Brazilian ambassador to the USA in Washington (1999-2004), a business consultant and chairman of the Superior Board of Foreign Trade of the Federation of Industries of the State of São Paulo (FIESP). “Here in Brazil, the largest part of governments and businessmen have not realized that the foreign trade internal and external policy agendas are increasingly intertwined. With the great transformation undergoing by the international order, this limit is disappearing,” he said.

As a characteristic of the current stage, Barbosa explains that the participation of foreign ministries in major international negotiations have been more frequent. “In the case of meat, it was an issue of the Ministry of Agriculture which coordinated this action abroad was the Ministry of Foreign Affairs,” says Barbosa, who recalls, however, that the direct participation of the diplomatic field should not be summarized to moments of tension. This presence should be used more often for the creation of new fronts. “The Apex (Brazilian Export and Investment Promotion Agency) went to the Ministry of Foreign Affairs and the commercial promotion was strengthened. In recent years, Brazilian foreign trade fell in both imports and exports, and the country needs to diversify its exports to open different markets. Companies have to integrate to that, making a big effort not only as a traveling salesman, but also to learn about the changes that are happening in the world,” says.

Barbosa says that it is necessary to pay attention to the amount of agreements that have been made bilaterally or among groups of countries that negotiate among themselves, with rules that they themselves set. “Brazil has to recover the time lost because, as they say in English, it went from rule-maker to rule-taker, and has to accept the rules of the game because it did not help to negotiate them. This is a problem for us and the commercial negotiation, the opening of the market and the government and corporate efforts interweave in that point.”

For José Paulo Rocha, Deloitte Financial Advisory partner, to gain new markets reveals the need for Brazil to review its recent attitude. “Brazil has always had an industrial vocation, despite the care that we must have with the ‘national champions’ strategy. We need to encourage the sector in a collective way, establish rules and procedures that make sense. Some companies, which are half publicly-held and half private, such as Embraer, come clearly to mind when discussing matters of this kind. The production of oil itself is still an innovations developer and can be exploited.”

"The only way for Brazil to position itself and try defending its interests is participating in a process by means of persuasion and participation in international exchanges. With this, we will attract partnerships and create our own agenda, that is beneficial to us."

José Paulo Rocha, Deloitte Financial Advisory partner

Although September 11, 2001 has marked the return of the values and beliefs imposition by means of military force (hard power), Barbosa reminds that the approximation between business and diplomacy is important because countries tend to stand out mainly through soft power, a term coined by American political scientist Joseph Nye, in the late 1980s. Nye, who is a professor at Harvard University, said that brute force, either by coercion or punishment, was no longer sufficient to obtain influence in the world and it would be necessary to develop a force of attraction, more lenient, by means of culture and political and governmental institutions.

For José Paulo Rocha, “we do not have the power to impose ourselves in relation to other countries by force. Few countries in the world have and exercise this power. “Without this assumption, the only way for Brazil to position itself and try defending its interests is participating in a process by means of persuasion and participation in international exchanges. Su6 ometimes, one to one, with South Africa and China, sometimes, multilateral” says the Deloitte’s partner. “With this, we will attract partnerships and create our own agenda, that is beneficial to us, and use it in the political and diplomatic means in such a way that it is possible to advance in areas where we have competence.”

Card up the sleeve

When Brazil sit at the table to negotiate, the conversation starts with the fact that the country practically does not have enemies. The cards up the sleeve are valuable even in comparison with other emerging countries. On the other hand, we have economic, political and institutional turbulences. Even with the downturn in the economy, Brazil has the advantage of having strong control institutions and a very large consumer market, as pointed out by Sergio Lazzarini, Insper’s professor.

According to the professor, a more lenient conversation can bring benefits, especially at a time when the United States, in Donald Trump’s era, raise the tone against China and Mexico. However, it is necessary clarity in presenting the rules. “For some markets, such as the agriculture, in which Brazil competes with United States, a protectionist position from Trump can even favor us and open more markets. Deep inside, the United States will have a dynamic and everything is very uncertain. There is not much we can do. We need to improve the regulatory environment to signal that we are controlling corruption and inviting investments.”

Influence and credibility

Before taking the first step, however, it is necessary for Brazil to take care of its reputation to convey credibility and, therefore, overcome initial resistance from abroad. Carlos Villanova, Manager of Communication and Marketing from Apex-Brasil, who is a career diplomat and is a former advisor to the Presidency of the Republic, says that researches that he followed throughout his career bring, in general, the same message: “It is very good take a draft beer, watch a bossa nova concert, or watch a soccer game with the Brazilian, but doing business with Brazil is kind of complicated,” he says, in short that the perception arising from the former part of the statement negatively impact the latter. “For them, the Brazilian is so good in the part of enjoying their lives that they do not have much time to comply with the terms of the contracts they sign.”

To revert this situation and work the reputation of a country that is a good business partner, Villanova introduces the concept of a “cloud of goodwill”, which would begin in one sector and benefit the others. To do this, it is needed to bring content to the conversation so that it becomes more enticing.

Recently, the agency launched the campaign B2B (Blogger to Blogger) with short documentaries on the website and TV channels of the news network CNN to talk about fashion, coffee, games and, in due course, the Brazilian beef. In the material, an international blogger discusses the topic with a Brazilian counterpart in informal moments. “The sensuality of Brazil’s reputation is closely linked to our creativity and our innovation. If you want to create a cloud of goodwill, it must have a large mythical and dreamlike component” says Villanova. Much as soybeans and iron have greater weight in export agenda, the Apex-Brasil representative says that attracting new business partners “will come much stronger from furniture businesses that only uses certified wood and from sustainable fabrics than soybeans, even when the grain is already the most sustainable one in the world”.

The videos are part of the initiative known as “Be Brasil”, which highlights the stories of Brazilian companies that earned attention in foreign trade and brings testimonies of long time importers who show their experience with Brazilian products. “What I need is that the largest soybean importer, which is certainly a Chinese, say: ‘I buy soybeans from Brazil for 20 years and have had no problems, because, even when they break the harvest, they have 50 days of sunshine and will deliver what I bought, as they always have over these 20 years,'” says Villanova.

The Apex-Brasil representative recognizes that a program would have much more strength if it had been released between 2007 and 2009, when the country was growing in a strong pace. Because of this, during recession, the bet on soft power is greater than ever: “In two or three years, when the economic crisis is definitely cooler, we can start to reap some fruits for having this cloud of goodwill formation around Brazil,” he concludes.