🇯🇵 Lula hosts Japan’s prime minister

Author

Gustavo Ribeiro
May 03, 2024 • Reading Time: 12 minutes

Happy Friday! Today, Lula hosts the prime minister of Japan. Brazil declares itself free of foot-and-mouth disease without vaccination. And the climate tragedy tormenting southern Brazil.

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Brazil sees Japan as a new market for its beef

President Luiz Inácio Lula da Silva today welcomes Prime Minister Fumio Kishida of Japan, who is on a two-day trip to Brazil and Paraguay. One of the Brazilian government’s main priorities is to open up the Japanese beef market for Brazilian exports (more below).

 Why it matters. Next year, Brazil and Japan will celebrate 130 years of close bilateral relations. Brazil is home to the world’s largest Japanese diaspora, with an estimated 2 million people of Japanese heritage. Japan, meanwhile, has around 210,000 Brazilian residents.

Trade. According to government data, Japan was the ninth biggest destination of Brazilian exports in 2023, worth around USD 6.6 billion. Brazil imported around USD 5.1 billion from Japan in the same period. This year, Japan was the destination of 1.6 percent of Brazilian exports.

  • Brazil’s top imports from Japan are mostly auto parts for cars and motorcycles. Brazil largely exports commodities, such as corn, poultry, iron ore, coffee, and soybeans.

Expectations. Japan imports most of its beef from the U.S. and Australia. Eduardo Saboia, Brazil’s deputy foreign minister for Asian and Pacific affairs, said Brazil has been trying to open up the Japanese market for beef since 2005. Sanitary conditions have improved a lot since, with the government declaring Brazil free of foot-and-mouth disease without vaccination (more below).

  • Mr. Saboia told reporters that Brazil would be able to compete in exporting bovine meat to Japan even with higher tariffs than those offered to the U.S. and Australia. Brazil would mostly compete with processed products (such as hamburgers) rather than fine beef sold to restaurants.

What they are saying. Mr. Saboia added that importing Brazilian meat could help Japan rein in inflation, which reached a 41-year high in 2023 — driven mainly by food prices.

Be smart. Another potential market for Brazil is in energy. Japan is a major energy importer, with 80 to 90 percent of its crude oil imports coming from the Middle East. 

Presidential diplomacy. Lula and Mr. Kishida have enjoyed a close relationship, and Mr. Kishida invited Lula to the G7 meeting in Hiroshima last year. A few months later, both countries announced a waiver on tourism visas.

Opportunity. Alexandre Uehara, chair of the international relations department at SĂŁo Paulo’s ESPM college and a researcher of Brazil-Japan relations, told The Brazilian Report that geopolitical factors open up opportunities for Brazil. 

  • For instance, the pandemic and the Russia-Ukraine war led many multinational companies to reconsider their supply chain strategies and decision to have so much business headquartered in China. The Asian giant reported its smallest annual foreign direct investment since the 1990s last year.

  • Regarding energy, Mr. Uehara sees opportunities in hydrogen, an area of mutual interest as Japan is a global leader and Brazil needs funding in order to accelerate its own projects.

Yes, but … Despite their mutual support for each other’s candidacies for permanent seats at the United Nations Security Council, Mr. Uehara says the Brazil-Japan relationship is heavily based on economic issues.

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A southern tragedy

At least 32 people have been killed and 60 remain missing after multiple days of severe rain in Rio Grande do Sul, Brazil’s southernmost state. Floods and torrential rain have cut off entire towns, forcing roughly 14,000 people to flee their homes and leaving people stranded as they wait for rescue by helicopters and boats. 

  • State and federal authorities have declared a state of calamity, which allows the government to carry out emergency spending on mitigation efforts.

  • The death toll is increasing, and the National Institute of Meteorology has issued new alerts at least until Saturday. Massive rainfall could also affect the neighboring state of Santa Catarina. 

What’s happening. In the last few days, the state of Rio Grande do Sul has received about 70 percent of precipitation typically recorded for an entire month. According to Ogmet, a meteorological service, eight of the ten cities where it rained the most in the world on Thursday are located in Brazil’s southernmost state.

  • In the central part of the state, one hydroelectric dam has partially failed, with another five at risk of collapse. Authorities urged people in dozens of cities to leave their homes for safer places.

  • State capital Porto Alegre is on alert as the nearby GuaĂ­ba River is swelling, with its levels rising by 8 centimeters an hour — reaching an 80-year high. 

What they are saying. Besides the obvious human tragedy, “this will be the worst disaster the state [of Rio Grande do Sul] has ever faced” in terms of material losses, said Governor Eduardo Leite. So far, 154 cities have called for aid, affected by floods, burst riverbanks, landslides, or other consequences of the storms.

  • The disaster should also disrupt multiple crops in the state. Rio Grande do Sul produces significant quantities of soybeans, rice, and wheat.

 Why it matters. Rio Grande do Sul is a textbook example of the violent weather swings caused by climate change. A couple of years ago, the state faced historical droughts. Over the past year alone, Rio Grande do Sul has faced four climate-related emergencies that claimed over 100 lives (including the current flooding). 

Climate exposure. As we showed back in December 2023, more than 60 percent of Brazilian cities have faced some type of emergency caused by extreme climate events over the past four years, according to data compiled by think tank Instituto Talanoa at the request of The Brazilian Report.

  • “We have noticed a change in patterns, mainly in the events related to excess rain. It’s a sign that something is happening, and it is very concerning,” Liuca Yonaha, a vice president at the Talanoa Institute, told The Brazilian Report at the time.

  • Brazil had a record 1,161 geological and geo-hydrological hazards in 2023, according to data compiled by the National Center for Monitoring and Early Warning of Natural Disasters. 

  • Environment Minister Marina Silva announced that the government plans to declare a permanent climate emergency across multiple municipalities. This initiative would grant budgetary flexibility to invest in projects aimed at mitigating climate risks.

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Free of foot-and-mouth disease

Brazil has declared itself free of foot-and-mouth disease (FMD) without vaccination, and in August the country will request the World Organization for Animal Health (OIE) to recognize that status. Agriculture Minister Carlos Fávaro said he hopes certification will be granted by May next year. The OIE declared Brazil free of FMD with vaccination in 2018.

  • To grant the declaration of a country free from disease without vaccination, the OIE requires the suspension of vaccination and a ban on the entry of immunized animals into states for at least 12 months.

FMD. Foot-and-mouth is a highly contagious viral disease that affects cattle, pigs, sheep, goats, and other cloven-hoofed ruminants. The virus weakens affected animals and permanently reduces their ability to produce meat and milk.

 Why it matters. Brazil accounts for about 15 percent of the world’s beef production and 20 percent of world exports, but recognition as a non-vaccination zone would open up opportunities beyond bovine meat producers. Pork and poultry exporters could benefit too.

Eye on the prize. Japan and South Korea are two new markets that could open up for Brazilian beef exporters. Both countries only buy meat from FMD-free zones without vaccination, paying 15-20 percent more than the average market price.

New markets. The Luiz Inácio Lula da Silva administration prides itself on opening up 100 new markets for Brazilian agricultural products. According to the government, that is twice as many as the previous Jair Bolsonaro administration did in its first 15 months.

  • “This expansion not only strengthens Brazil’s agricultural presence on the world stage but also promotes sustainable development, income generation, and employment, directly benefiting farmers,” said Roberto Perosa, the Agriculture Ministry’s secretary for trade and international relations.

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  • Lula’s farming feuds: The relationship between farmers and the Luiz Inácio Lula da Silva administration is by no means a warm one. The government is trying to change that with shedloads of credit.

Quick catch-up

The OECD raised its 2024 GDP growth expectations for Brazil, from 1.8 to 1.9 percent. For 2025, the forecast also went up slightly — from 2 to 2.1 percent. 

The SĂŁo Paulo City Council approved legislation allowing Sabesp, a sanitation company, to be privatized. Mayor Ricardo Nunes quickly ratified the bill. The SĂŁo Paulo state will reduce its stake in the company from just over 50 percent to somewhere between 18 and 30 percent.

A union of Petrobras workers joined the government in opposing a deal the company signed in 2019 committing to selling eight oil refineries to foster competition in the sector — which Petrobras dominates today.

A Workers’ Party lawmaker introduced a proposal aimed at increasing the government’s voting powers in Eletrobras, a formerly state-controlled energy company that was handed over to private control in 2022. There is a very narrow path (if at all) for the bill to pass. 

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