Panama Canal and Brazilian ag export expectations

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The president of the Confederation of Agriculture and Livestock of Brazil (CNA), Senator Katia Abreu, said the new Panama Canal, which connects the Atlantic to the Pacific Ocean, will be an important transport route for Brazilian agricultural products to Asia. 

"By reducing the distance and travel time that separates Brazil from our largest trading partner - China - the new channel will allow Brazilian exports to be more competitive," Abreu said.

The senator was one of the speakers of the Latin American edition of the World Economic Forum held in Panama City. She was in the country to both participate in the forum as well as visit the canal, which turns 100 years old this year and is going through an expansion project to accommodate larger vessels.

"With a travel time of four days or less, the canal will also be a more competitive environment to route Brazilian products to Europe," said the senator. She stressed, however, that for Brazil to have the desired competitiveness, investments needed to be made in the Northern Arc, which includes ports and waterways in the North, Northeast and Midwest regions.

By using the ports of the Northern Arc, the flow path of Brazilian agricultural to Asia via the Panama Canal will be shorter. The senator also highlighted the progress on the issue of logistics and infrastructure in Brazil. She cited new port legislation and grant approvals for the construction of new highways and railways that will also improve the flow of agricultural products.

"We now have the conditions and legal certainty necessary for entrepreneurs to invest in the construction and installation of new port terminals and we are very optimistic about the formation of Public-Private Partnerships for highways, railways and waterways," she emphasized.

The president of CNA also reiterated that Brazil has one of the strictest environmental laws in the world and strengthened the proposal that other countries should follow Brazil's example of preservation of riparian forests. She referred to the Permanent Preservation Areas (PPAs), situated on the banks of rivers and streams that pass through rural properties with the goal of preserving water quality." This should be a global example. Attacking these spaces is an environmental crime," Abreu affirmed.

Free Trade

Senator Kátia Abreu participated in a panel discussion on the prospects of the Latin American economy at the regional World Economic Forum. In regards to a free trade agreement with Europe, Abreu warned that "Brazil cannot repeat the mistake of not accepting the proposal of former U.S. President Bill Clinton to join the Free Trade Area of the Americas (FTAA). The member countries of Mercosur cannot miss the opportunity to secure a free trade agreement with the European Union." Throughout the debate, she spoke of the political difficulties faced over the past years in the formation of the free trade agreement between Mercosur and the EU, citing the strength of Argentina's protectionism in the domestic industry.

However, the senator also pointed out that many of the obstacles and internal differences have been overcome. Proof of this is that the CNA and the National Confederation of Industry (CNI) teamed up for the first time, along with the Brazilian government, to promote efforts to facilitate the agreement with the European bloc. Abreu recognized the Chinese as an example.  She believes Brazil needs to have the courage and steadfastness of China, which began opening its economy in the twentieth century with the creation of Special Export Zones."  The model worked and today the Chinese outperform the EU in trade with Brazil," she stated.

The president of CNA also expressed concern with the new U.S. Farm Bill. "It has a very protectionist bias, which does not take into account productivity," she argued. There are concerns that the new bill will threaten the performance of Brazilian agricultural in the international market.

According to the senator, Brazil will have to make further structural reforms to further improve the performance of the economy in areas such as social security, public administration and taxes.

Abreu also noted that Brazil is promoting a revolution in logistics with the opening of ports, roads and railways to private capital. "The reforms are inevitable to ensure sustainable development," she concluded.  

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