Message of Brazilian Ambassador to Switzerland

01/04/2014
Igor Kipman

Annual Report 2013; pag. 31

Once again I am honored by the Swiss-Brazilian Chamber of Commerce asking me to take part in its annual report publication. It is an even greater satisfaction to note that the year 2013, my second term heading Brazil's Embassy in Berne, saw bilateral initiatives broadening the scope of the wide range of already excellent interactions between Brazil and Switzerland.

Particularly outstanding among the initiatives that marked 2013 was July's mission to Brazil led by Federal Council member Doris Leuthard, head of Switzerland's Environment, Transport, Energy and Communications department, accompanied by an official delegation, which led to important instruments of bilateral cooperation such as the renewal and broadening of the terms of the Aviation Agreement that had been in effect since 2001. Ms Leuthard's extensive and significant agenda for the mission included high-level meetings with Brazil's vice-president, Michel Temer; Transport minister César Borges; Mining and Energy minister Édison Lobão; Environment minister Izabella Teixeira; Rio de Janeiro state governor Sérgio Cabral, and meetings with senior management from energy giants Petrobras and Eletrobras, which shows the relevance mutually assigned to bilateral dialogue.

Equally importantly, I would highlight four bilateral institutional initiatives from last year: the 5th meeting of the Brazil-Switzerland Joint Commission for economic and trade relations in Berne; the Parliamentary Group's official mission to Brasília; the preparatory meeting for the 2nd Brazil-Switzerland Financial Dialogue between the Swiss Federal Department of Finance and the Brazilian Ministry of Finance; and the 4th Brazil-Switzerland Political Consultations meeting held in Brasília.

Among the economic issues, SWISSCAM has primarily focused on bilateral trade, which posted very encouraging numbers. I note, with satisfaction, that Brazilian-Swiss bilateral trade in 2013 did much better than expected given the trend in the international economy, which was still recovering. In 2013, Brazilian-Swiss trade grew 18.51 % on 2012 in real terms to reach US$ 5.3 billion.

I recall that SWISSCAM's 2013 report mentioned that Brazilian exports to Switzerland had shown modest growth in the previous year. But that picture changed in 2013 with Brazil's exports to Switzerland up 38.29 % on 2012 at US$ 2.361 billion. A point to note is that on comparing the statistics for the last two years, Brazil's share of manufactured products in its exports to Switzerland grew 224 % on the previous year to reach US$ 1.2 billion, and for the first time in the history of bilateral trade relations, surpassed total commodity exports of US$ 109 million (20% down on 2012) and semi-manufactured goods of US$ 1 billion (13.43 % down over the same period).

This growth must be credited, in particular, to the presence for the first time in the two countries' trade agenda of "drilling / prospecting rigs, floating platforms etc." worth US$ 802 million, which accounted for the second-largest share (34%) of Brazilian global exports and was key to above-average growth of high added-value exports. Notwithstanding the overall performance of this sector, Brazil's number-one export is still "gold bars, wire, sections etc." (35 %), which totaled US$ 828.4 million in 2013 (0.75% down on 2012) but was still the top item imported by Switzerland.

Also worth mentioning were other traditional products that contributed substantially to the predominance of manufactured goods in Brazilian exports: "gold bullion for non-monetary use", with a total of US$ 119.6 million (+174 %); "machinery and self-operating mechanical appliances", with US$ 84 million (+14 %). Among semi-manufactured goods for immediate consumption, exports of "edible pieces and offal of hens and chickens etc." with US$ 45 million (+2 %); "frozen orange juice", with US$ 75 million (+ 85 %); "non-manufactured tobacco" with US$ 16 million (+85 %); "other food preparations", with US$ 12 million (+132 %); and "polyester cords", with US$ 10.5 million (+440 %), contributed decisively to Brazil's 2013 bilateral trade deficit of US$ 579 million being some 55 % less than the US$ 1.059 deficit posted in 2012.

As for Brazil's imports from Switzerland, the main item was "other blood fractions and modified immunological products etc." totaling US$ 258.5 million (+320 % on 2012) which alone accounted for a 6.28% increase in exports to Brazil in 2013, which totaled US$ 2.940 billion. The numbers for this sector, along with machinery and equipment and precision instruments, confirms the strong position of the high-tech segment among Swiss exports to Brazil, particularly the pharma-chemical industry.

No less important than trade is direct investment, which continues to reflect major bilateral initiatives. Switzerland was again to be one of the top direct investors in Brazil in 2013 and played a substantial role in the pick-up of the latter's economic growth. Note, in particular, that Zurich's airport administrator was part of the AEROBRASIL consortium that successfully bid at the Confins airport privatization, in Minas Gerais, thus directly contributing to the federal government's infrastructure development program. Also worth mentioning is that 2013 saw two significant Brazilian initiatives with the São Paulo based GP Investments acquiring control of Zurich-based private equity company APEN, and Banco Safra growing its share of the Swiss financial market that had began with the operations of its Banco Safra Suisse subsidiary in June 2000, as it acquired UTO Bank AG and then Bank Sarasin in 2011.

Before concluding this quick overview of economic and commercial interaction, which is perfectly in line with the high level of Brazilian-Swiss relations, may I add that 2014 will be marked by the World Cup, a major event that will pose excellent opportunities for both investments and tourism and bilateral trade. Finally, I wish to congratulate the entire SWISSCAM team on the excellence of its contribution to strong Swiss-Brazilian relations.