Brazil country brief
Australia opened its first diplomatic mission in Latin America in Brazil's former capital, Rio de Janeiro, in 1945. Brazil established a diplomatic presence in Canberra the following year.
Recognising the deepening of bilateral relations in recent years and the growing shared role of the two countries in the world, in June 2012 Prime Minister Julia Gillard and Brazilian President Dilma Rousseff agreed to elevate the bilateral relationship to a "Strategic Partnership", including a commitment to an annual leaders' meeting and a strategic dialogue.
System of government
Brazil was settled by the Portuguese from 1500 after the 1494 Treaty of Tordesillas divided the world between Portugal and Spain. Rio de Janeiro functioned as the Capital of the Kingdom of Portugal from 1808 to 1821 when Lisbon was occupied during the Napoleonic Wars. Brazil achieved independence from Portugal in 1822.
Brazil is a federal republic composed of 26 states and a federal district, with three tiers of government. Each state has its own government structure mirroring that at the federal level, and there are over 5,500 municipal councils. Voting is universal and compulsory for all literate citizens from 18-70, and optional for those aged 16-17 and over 70, or who are illiterate. Under Brazil's Constitution, the president and vice president are elected on the same ticket by popular vote for four-year terms. The National Congress consists of the Federal Senate with 81 members serving eight year terms, and the Chamber of Deputies consisting of 513 members elected by proportional representation to serve four-year terms.
Recent political developments
Dilma Rousseff, a member of the centre-left Workers party and Brazil's first woman president, assumed office in January 2011, for a four-year term. She previously served as Minister for Mines and Energy and Chief of Cabinet in former President Lula's administration. President Rousseff is a vocal supporter of human rights, social inclusion and gender equality, and has made a concerted effort to deal with high-level corruption within Brazil's political system.
Brazil has traditionally been an inward-looking country, both politically and economically. However, throughout the 1990s, Brazilian foreign policy reflected a more internationalist approach under former Presidents Collor and Cardoso. Priority was given to relations with other Latin American countries. President Cardoso worked to promote Brazil's image as an important international player and regional power, and commenced a campaign to win a permanent seat for Brazil on the United Nations Security Council.
Brazil's outward-looking foreign policy focus accelerated under President Lula, who championed the rights of developing countries and sought to project Brazil as a leader in Latin America (emphasising the importance of Mercosur). Brazil is also a driving force in the recently created Union of South American Nations (known as Unasur). Under Lula, Brazil significantly boosted Brazil's' diplomatic presence in Africa and the Caribbean. Brazil is also active within the BRICS (Brazil, Russia, India, China and South Africa) grouping.
President Rousseff has continued an outwards-looking foreign policy, albeit less activist than under the Lula administration. As an increasingly important economy in its own right, Brazil has become a regular participant in global forums such as the World Economic Forum, and is a member of the G20. Brazil hosted the G20 Finance Minister's Meeting in 2008.
Brazil has placed increased emphasis on reciprocity in trade negotiations. It has asserted that progress in the World Trade Organization and Doha Round negotiations will be contingent on concessions being offered by developed countries on agricultural subsidies.
At a glance
For the latest economic data refer to the Brazil country fact sheet [PDF 45 KB].
Brazil is the world's fifth-largest country in size and population and in 2012 overtook the UK to become the world's sixth-largest economy, with GDP around A$2.5 trillion. Brazil's per capita GDP is lower than in Chile or Mexico, but significantly higher than in fellow BRICS members, China and India.
Growth in 2012 was lower than initially expected, at 1.0 per cent, with inflation at 5.5 per cent. GDP growth has been driven by strong private consumption and investment, underpinned by a growing labour force and growth in credit and real wages. Brazil's unemployment rate is around six per cent, some 15 million new formal jobs have been crated in recent years and the amount of available credit is now more than five times higher than in 2002. The World Economic Forum Global Competitiveness Index for 2012-13 ranked Brazil 48 out of 144 countries and the World Bank's 2012 rankings for 'ease of doing business' placed Brazil 130 out of 185.
With large and well-developed agricultural, mining, oil and gas, manufacturing and service sectors, Brazil is expanding in world markets. China now equals the US as Brazil's largest trading partner. Brazil is second to Australia as the world's largest iron ore exporter. Brazil is the largest, or second-largest, exporter of beef, soybeans, orange juice, sugar and chicken. It is the world's second-largest ethanol producer and largest exporter. However, an appreciating currency, rising cheap imports, principally from China, and chronic economic inefficiencies (the so-called custo Brasil –'Brazil cost') have led the government to impose a number of protectionist measures, including in the auto sector.
Externally, the Southern Cone Common Market ('Mercosur' - known in Portuguese as 'Mercosul') is the most important economic grouping for Brazil. Mercosul was formed in 1991 by Brazil, Argentina, Paraguay and Uruguay; Venezuela formally joined Mercosul in 2012. Under the Mercosul treaty, tariffs between members are lowered gradually on most products and common external tariffs are applied to non-members. Mercosul represents a market of almost 250 million people with a combined GDP in 2011 of more than US$3 trillion.
The bilateral relationship
Short history of the relationship
Australian and Brazilian foreign and trade policy interests coincide in several important areas and the two countries cooperate multilaterally on issues of mutual interest including climate change, agricultural trade reform in the World Trade Organization (WTO) through the Cairns Group, and as members of the 'five interested parties' coalition (FIPs — with the US, European Community and India). We are also both members of the G20, the group of twenty major and emerging economies, which has been designated the premier forum for global economic cooperation. Brazil and Australia have a close working relationship in the G20. Reform of international financial institutions (such as the World Bank and IMF) to give developing countries a greater voice in these organisations is a shared G20 priority for Australia and Brazil.
Under the Strategic Partnership, leaders agreed to hold annual leaders' meetings and expand the bilateral senior officials' meetings, held every 1-2 years, to a strategic dialogue to exchange views on key bilateral, regional and multilateral issues. (The most recent senior officials' meeting was held in Brasíilia in October 2010.) The inaugural Australia-Brazil Second-track Dialogue took place in São Paulo in March 2013. The Strategic Partnership builds on the 2010 MOU an enhanced partnership. It contains initiatives aimed at improving bilateral links, including education, resources and energy, science and technology and trade and investment as well as furthering multilateral and regional cooperation.
In 2001, the Australian Government announced the establishment of a Council on Australia Latin America Relations (COALAR). Since its inception, the Council has been active in promoting Latin America as a market for Australian exporters. It has supported a range of activities in Brazil, including cultural and trade promotion events.
Recent Ministerial and Head of Government visits
Prime Minister Julia Gillard visited Rio de Janeiro in June 2012 for the Rio+20 Conference on Sustainable Development and met Brazilian President Dilma Rouseff. Dr Emerson visited São Paulo, accompanied by a business delegation, and Brasília in April 2012. Then-Foreign Minister Rudd visited Brazil in December 2010 while attending the Mercosur summit held at Foz do Iguaçu. Then-Trade Minister Simon Crean visited Brazil in April 2010, where he signed an Air Services Agreement with Brazil's Minister for External Affairs, Mr Celso Amorim. The then-Minister for Foreign Affairs, Stephen Smith MP, visited Brazil on 24-26 August 2009. In April 2005, during a visit to Brazil by the former Minister for Education, Science and Training, Dr Brendan Nelson, Australia and Brazil signed a Memorandum of Understanding (MoU) on Education Cooperation. This followed a MoU on Science and Technology, signed in 2001, which established a joint cooperation program. In April 1998, a MoU on Sanitary Matters was signed by the Agriculture Ministers of Australia and Brazil to facilitate bilateral trade in agricultural products.
Then-Brazil Foreign Minister Mr Celso Amorim visited Australia from 26-28 August 2008. In addition, Australia has received a number of Brazilian official visitors, including the former Minister for Culture, Mr Gilberto Gil in 2004, the former Minister for Agriculture, Mr Robert Rodrigues in 2005 and a Brazilian parliamentary mission in 2008.
Australia participates in the CER-Mercosur Dialogue, bringing together Australia, New Zealand, Brazil, Argentina, Paraguay, and Uruguay. The most recent meeting took place in Uruguay in April 2010. The dialogue was established in 1996 as a mechanism to strengthen cooperation on global trade policy issues and to promote inter-regional trade and investment. Both Australia and Brazil are members of the Forum for East Asia-Latin America Cooperation (FEALAC), which aims to increase and improve mutual understanding, political dialogue and cooperation among member states of East Asia and Latin America.
In addition to a strong trade and investment relationship, Australia and Brazil have growing people-to-people links. The Australian education system is an increasingly attractive option for Brazilians. In 2011 there were more than 15,000 Brazilian student enrolments in Australian institutions including schools, universities, vocational education and training providers and English language colleges. Brazil is the largest source of students from Latin America studying in Australia. Brazil is also the largest Latin American market for visitors to Australia. In 2009, nearly 26,000 Brazilians visited Australia, while around 12,600 Australians visited Brazil.
Community presence in Australia
Since the 1970s, a small but growing community of Brazilians have migrated to Australia. According to the2006 census, close to 7,500 people living in Australia were born in Brazil, with a further 6,500 claiming Brazilian ancestry.
Bilateral economic and trade relationship
Overview and statistics on the bilateral trade and investment relationship
Australian economic engagement with Brazil has grown steadily since the mid-1990s, most notably in the mining, agribusiness and services sectors. Brazil is Australia's largest trading partner in South America, with two-way merchandise trade between Australia and Brazil totalling A$2.02 billion in 2011-12. Merchandise trade comprised exports of A$1.29billion to Brazil and imports of A$722 million from Brazil (refer Brazil country fact sheet [PDF 45 KB]). Major exports to Brazil included coal, crude petroleum, iron and steel. Major imports from Brazil included iron ore, coffee and civil engineering equipment and parts.
Australian investment in Brazil was some A$16.5 billion in 2011. Major Australian companies with a presence in Brazil include BHP Billiton, Macquarie, Pacific Hydro, Rio Tinto and Westfield. Brazilian companies with investments in Australia include JB Swift, Vale, WEG and Natura Cosmeticos.
Opportunities exist for increased Australian trade and investment in areas such as information technology, biotechnology, transportation (rail and marine), telecommunications, banking and insurance, mining, water and waste water management, oil and gas, power, education, agribusiness, tourism and infrastructure. A growing number of Australian companies are now operating in Brazil, though a lack of mutual awareness remains an obstacle to expanding commercial ties.
There are no direct flights between Australia and Brazil though Qantas operates onward services to destinations in South America from Santiago via a code sharing agreement with Chile's LAN Airlines.
Brazil's simple average most-favoured nation (MFN) applied tariff was 11.5 per cent in 2008, up from 10.4 per cent in 2004. Brazil reduced its highest duty rates from 55 per cent in 2004 to 35 per cent in 2008. Brazil has introduced a number of export finance, insurance and guarantee measures aimed at assisting producers and exporters to access credit. Brazil claims to have simplified its import licensing regime and expedited customs clearance procedures.
Brazil continues to liberalise its services sector, including telecommunications and financial services. The government has a reform agenda for the taxation system, social security, bankruptcy laws and other improvements in financial markets to reduce the cost of finance.
Updated March 2013