ByTheEast: The Câmara de Comércio Árabe-Brasileira (CCAB, Arab-Brazilian Chamber of Commerce) was founded 67 years ago. Times were different then. What was its mission initially? How did it evolve?
Rubens Hannun: The Arab-Brazilian Chamber of Commerce was founded in 1952 by a group of Brazilian businesspersons of Syrian-Lebanese origin* with a focus on boosting trade between Brazil and the Middle East countries.
While at the onset, our institution was called the Syrian and Lebanese Chamber of Commerce, it eventually merged with the Union of Arab Chambers – the economic arm of the League of Arab States. At this juncture, it changed its name to the Arab Brazilian Chamber of Commerce and became the representative of the Arab League’s commercial interests in Brazil, and of Brazil’s commercial interests in the Arab countries.
Our job, just like that of other chambers of commerce, is to facilitate business including finding a partner for an Arab company if it aims to partner with a Brazilian counterpart to distribute its products in Brazil, to find buyers, and even to roll out projects. Our role is to create, support and sustain these connections.
The same applies to Brazilian companies seeking our intermediation to explore opportunities in Arab countries. We offer services such as advisory on economics and market access, identification of prospective partners and clients, support in arranging matchmaking meetings, guidance on regulatory aspects relevant to the trade relations intended, among other services like document certification and official translations.
We have hundreds of cases of Arab and Brazilian businesses of all sizes and industries that we have assisted in all these years.
Case in point: a few years ago, we helped a Brazilian clothing company specialize in Islamic fashion and create product lines for Muslim women, and we even helped them find distributors for their products in Lebanon. We also helped a Brazilian construction company bid in a tender for a major high-end hotel project in Dubai. This company, by the way, ultimately won the tender and got the project, one of the biggest and most beautiful in the Emirate.
We have also helped the Egyptian Army, a key player in the Egyptian economy, to find meat packers in Brazil for supplying beef cuts. It may interest you to know, the Egyptian Army is the biggest importer of Brazilian food products in Egypt. It buys both to supply its armed forces, one of the ten biggest in the world; it also imports food to distribute to the needy.
“The Arab League is Brazil’s third biggest trade partner in the world, and the second biggest destination for Brazil’s agribusiness; it is the most relevant industry in Brazil nowadays.”
We have also helped a supermarket chain active in several Arab countries which needed fruit suppliers and ended up doing business with producers in Brazil’s São Francisco River Valley, with weekly batches shipped via Emirates airline. We also helped a Brazilian electric showerhead manufacturer find an advertising agency in Sudan to make commercials to be aired during soap opera intermissions.
Intermediating trade deals naturally involve analysis in due diligence which also factors in issues which could potentially harm bilateral trade. For example, this year we invested a lot of effort to persuade and sensitise Brazil’s government to the importance attached by Arab countries to the issue of relocating Brazil’s embassy from Tel Aviv to Jerusalem, which Brazilian president Jair Bolsonaro had pledged to do so; naturally this would have had repercussions on Arab-Brazilian trade.
Recently, alongside other entities and the Embassy of Brazil in Cairo, we have also worked to persuade Egypt’s government to loosen its sanitary rules on Brazilian poultry imports. We have been successful in persuading Egypt to waive the requirement for Egyptian veterinarians to oversee production of each and every chicken batch, since Brazil meets all requirements of the World Organization for Animal Health, of which it is a member. As a result of our efforts, Egypt gained access to Brazilian poultry at competitive prices, and Brazilian companies gained market share to the most populous market in the Arab League.
At the Arab Chamber we carefully analyse the construct of Brazilian-Arab commercial interests at various levels of government and how they impact one another in various ways. Arab countries have significant trade ties with Brazil. After all the Arab League is Brazil’s third biggest trade partner in the world, and the second biggest destination for Brazil’s agribusiness; it is the most relevant industry in Brazil nowadays.
“We are considering opening an office in Egypt, which in 2018 became the leading importer of goods from Brazil in the Arab League, thanks to a free trade agreement with the Mercosur.”
BTE: The CCAB has a representative office in the United Arab Emirates. Why this choice of location?
Hannun: This year we expanded our footprint by opening an Arab Brazilian Chamber of Commerce in Dubai, UAE. We believe the organization needs bases in the Arab world so it can work in a more dynamic way.
Our work in the Arab countries typically involve interactions with government entities at various levels. To that end we require our own advanced outposts, which will enable us to work faster, more dynamically and efficiently for our one-on-one interactions.
Case in point: during the second half of this year, we’re having a Brazilian culture festival in Saudi Arabia, in partnership with the Saudi government and the Embassy of Brazil in Riyadh. The purpose of that is to enhance the cultural connection between Brazil and that Arabian Peninsula country, as well as enable Brazilian companies to become familiar with that market and to approach its consumers. Most of the discussions regarding this festival are being handled by the Arab Chamber’s UAE office.
Our Dubai office is also having meetings with the Saudi Food and Drug Authority in an effort to regain recently revoked export authorizations for Brazilian poultry companies.
Besides making our work more effective, having an outpost in an Arab country is also a demonstration of the importance we attach to bilateral relations. In Arab culture, establishing, nurturing and sustaining relations is very important. This is not very effective from a distance; being present is key. Thus, we made the decision to open this first office in the Arab world, keeping in mind that more will be needed as trade relations evolve. At this point, we are considering opening an office in Egypt, which in 2018 became the leading importer of goods from Brazil in the Arab League, thanks to a free trade agreement with the Mercosur.
BTE: Still, according to the International Trade Statistics Database from Comtrade (2017), no Arab country appears in the Top 10 of Brazil’s suppliers/countries or Brazil’s clients/countries. What is the evolution of Brazilian foreign trade vis-à-vis the MENA / CCG region as a whole? Could you give us a general point of view?
Hannun: In fact, current statistics are even better. Considering Brazilian Ministry of Economy data on the first five months of 2019, Arab League countries are no less than Brazil’s third biggest trade partner in the world, trailing behind only the United States and China. Last year, exports from Brazil to the Arab League amounted to slightly over $11.48 billion.
Exports consisted mostly of sugar, poultry, iron ore, beef and grain, that is, several products from agribusiness, the most dynamic industry in Brazil’s economy, and one for which Arab countries constitute the second biggest buyer. Over the past twenty years, exports from Brazil to the Arab world increased seven fold. During that time, exports from Brazil to Arab countries and from Arab countries to Brazil increased by almost ten times. As you can see, our trade relations are evolving consistently for Arabs and Brazilians alike, in a complementary way.
Currently, Brazil exports mostly food products to the Arab world. Arab countries supply Brazil mostly with fuel, specialty chemicals, plastic, fertilizers and phosphate minerals, which by the way are crucial to the competitiveness of Brazilian agribusiness. Without the phosphate it imports from Arab countries for soil correction, Brazil would be unable to grow plants or raise cattle in its Cerrado area, where agricultural activity is strongest. And it must also be said that trade is evolving and taking on new contours.
Bilateral trade between Brazil and the Arab countries in the consumer market is surging along with deepening investments. For example, Brazil’s biggest food company, BRF, which owns a manufacturing facility in Abu Dhabi has announced it will soon make acquisitions in Saudi Arabia. Vale, Brazil’s leading mining company, has picked Oman to host its only iron ore pelletizing unit in Asia, which by the way is the main reason ore is one of Brazil’s top export items. Marcopolo, a company specializing in making buses – a specialty of Brazil’s that is unmatched in the world – owns plants in Egypt.
This is reciprocated in the Arab world too. Dubai’s DP World runs a company in Brazil which operates one of the main port terminals in the country. Qatari companies own stakes in airlines and the natural gas industry in Brazil. Saudi funds control one of the biggest beef companies in Brazil, and own stakes in other food companies as well.
The dynamic in these complex economic relations are complementary and mutually beneficial to Brazilians as well as to the Arabs. Considering that sovereign funds in Arab countries have $2.3 trillion between them for investment purposes, which incidentally is 40% of all capital held by such funds worldwide, there is a lot of synergy to step up these bilateral relations, which could be routed through strategic alliances that will provide Arab countries access to food for their growing populations, while giving Brazil the ability to address its infrastructure shortcomings.
BTE: What products or services are exported from Brazil to Arab countries?
Hannun: Currently our top food export products include, sugar, poultry, iron ore, beef products and grains, in that order, and have a gross combined value of $11.48 billion as on 2018.
BTE: Same question, but in the opposite direction: what products or services are exported from Arab countries to Brazil? Figures are welcome as well.
Hannun: We basically import fuel, specialty chemicals, plastic and fertilizers. The chart above also contains import data. Note that relations are highly complementary.
“Saudi Arabia is still the leading importer of Brazilian poultry in the world, and an importer of various Brazilian agribusiness products.”
BTE: With which Arab countries does Brazil have the most commercial relations?
Hannun: Currently countries that are the biggest importers of Brazilian products are Egypt, Saudi Arabia and the UAE.
Egypt is an interesting case, since prior to 2018 it was one of the five biggest Arab League markets for Brazil. Once the Mercosur-Egypt Free Trade Agreement became effective, in 2017, Egypt fast became the single biggest market for Brazilian products in that trade bloc.
Saudi Arabia also remains highly relevant. It’s still the leading importer of Brazilian poultry in the world, and an importer of various Brazilian agribusiness products. The same holds true of the UAE, which, although is not as big a consumer market, it is still a country that has specialized in re-exports, and it became the hub whereby goods from Brazil, especially halal poultry, reach numerous Islamic markets around the globe.
It is interesting to note, that trade relations have past through many stages. In the late 1970s, during the oil crisis, trade began to pick up. At that point, Brazil entered into agreements with Arab countries to ensure a supply of Arab oil. In return, Brazil began exporting a number of items and services that were needed in the Middle East. It was then, especially in the 1980s, that Brazil first began exporting halal poultry, first to Saudi Arabia, and then to other countries in that region. Brazil also shipped automobiles and even aircraft made by the then-state-run Embraer (Empresa Brasileira de Aeronáutica) to Iraq. Moreover, Brazilian construction companies built much of Iraq’s railway, road and port infrastructure during that time. As you can see, trade relations have always been complementary, enabling both sides to develop in balance.
BTE: Former President Michel Temer was of Lebanese descent, Fernando Haddad (who ran for office instead of Lula) too. Have the Arab countries gained from this proximity during the previous presidential term?
Hannun: Brazil’s trade with Arab countries has always been important, and virtually every Brazilian leader has understood that more than being beneficial, maintaining closeness with Arab countries is of strategic importance, given the background of strong cultural and historical bonds between them.
Brazil’s connection with the Arab countries, by the way, dates from when Brazil didn’t even exist as such. Brazilians indirectly inherited many aspects of the Arab culture of Portugal, the European country that ushered in the colonization of Brazil’s territory, and which remained, for almost 800 years, during the Middle Age, under the rule of Arab peoples from North Africa – from whom they inherited mathematical knowledge that was key in the Age of Discovery, during the 15th century.
Much later, in the late 19th and early 20thcentury, Brazil was targeted by several Arab immigrant waves, particularly from Lebanon and Syria. Many of them were Christian Arabs fleeing fighting in the then-Turkish Ottoman Empire, among them my father. There were a lot of them, to the point that some 14 million Brazilians have parents, grandparents or great-grandparents who were born in Arab countries, including me. I am of Arabic descent. My father is a Syrian born in the city of Homs. My mother, on the other hand, was born in Brazil, but her parents, my maternal grandparents, were Arab immigrants.
The integration of Arabic culture in Brazil in in numerous ways. In retail, for example, some of the biggest chains in Brazil were founded by Arab immigrants, often with no resources at all. These are now very strong companies employing lots of people, which are able to operate in a continent-sized country with less-than-optimal logistics infrastructure, with limited per capita income. They had to incorporate credit solutions in order to be able to sell their product, and they have become really competitive as a result of operating in such a hostile environment.
Although these retail chains are not known outside of Brazil, they have a very strong market presence in the country to the extend that even Walmart, the world’s biggest brick-and-mortar retailer, was forced to redefine its strategy and cut back on its operations in Brazil.
Many Brazilian industrial companies, in many different lines of business, were established by Arabs. You mentioned two political leaders of Arab descent, but there are many others throughout the country. In medicine, one of the best, most modern hospitals in the city of São Paulo, the Syrian-Lebanese Hospital*, where presidents get treated, was founded by Arab immigrants.
Even today, Brazil welcomes Arab immigrants, predominantly from Syria. And this is because Brazil is one of few countries in the world that grants asylum to Syrian refugees. Arabs continue to find shelter and a chance to start their lives over in Brazil. In return for that, Brazil owes much of its progress to the Arabs who got here and labored, became entrepreneurs, and gave their children to this nation.
BTE: What is Lebanon’s position in these relations?
Hannun: Lebanon is a very important country to the history of Brazil. Most of the Arab immigrants who came to Brazil are from Lebanon. The Lebanese diaspora is a very vibrant and present question in the Arab-Brazilian community.
BTE: According to Lebanese customs (2018), Brazil did export for USD344 million to Lebanon, and did import only for USD39 million. How Lebanon could export more to Brazil? What new opportunities could be developed for Lebanese goods/services/companies?
Hannun: There are ongoing initiatives that can bring greater balance to Brazil-Lebanon trade. One of them is the Mercosur-Lebanon Free Trade Agreement, which is at an advanced stage of negotiations and close to being concluded. Although there are sensitivities on both – the Mercosur’s and Lebanon’s side – that need to be overcome, but we expect an agreement to be reached on terms that are well-balanced and beneficial to all.
Brazil’s vice president Hamilton Mourão travelled to Lebanon recently and discussed the agreement with president Michel Aoun. They signed a memorandum of understanding pledging to advance these talks. We expect that just like the Mercosur-Egypt agreement that’s already in place, a Brazil-Lebanon free trade deal would certainly boost exports from both sides. Note that these countries have complementary economies, and Lebanon’s main export product, fertilizers, is in very high demand in Brazil, where it’s crucial to agribusiness. Besides fertilizers, there are other products that Lebanon could export.
BTE: According to Marcos Troyjo, Brazilian Secretary of State for Foreign Trade and International Affairs, Brazil is currently experiencing a “real change of style”. Troyjo is a supporter of the pro-American liberal model advocated by Bolsonaro. How will this policy affect Brazil’s external trade relations (outside countries from Latin and North America)?
Hannun: The biggest political and economic leaders in Brazil believe that the future of the economy does not depend on the adoption of a given political view as much as on whether the country will carry out the internal reforms it needs to curb increasing public spending, especially in social security, to address State finances, attract investment, create jobs and recover income, which has been stagnant for years now.
Although Brazil’s economy performed fairly modest in 2018 preliminary 2019 figures show signs of a slowdown; this is to the extent that the productive sector is fearing recession. But there’s good news even amid this scenario. Brazil is a commodity exporter first and foremost. Global demand for food remains strong, especially from Arab countries. Agricultural commodity prices, which had been slumping for a few years, are beginning to bounce back.
Thus, Brazil has been managing to keep foreign sales revenues at balanced levels, with relevant increments in some product categories. This has at least partly made up for lackluster economic and industry performances. If you can get good export results even in a slumping economy, imagine what will happen once the conditions for investment are back in place.
“Many sectors of Brazil’s government understand the importance of Arab countries to the economy, and they aren’t at all interested in damaging this trade partnership. Proof of that is the fact that instead of moving the Embassy, the administration announced the opening of a trade office in Jerusalem.”
BTE: What has changed since Jair Bolsonaro’s election regarding the commercial relations with Arab countries?
Hannun: We believe there hasn’t been any perceptible changes to bilateral relations simply because we have a new president. In the first five months of 2019, revenue from exports from Brazil to the Arab League were up approximately 15%, and export volume increased even more, but that was expected. There was pent-up demand in major Arab markets. Commodities have begun to bounce back this year. The slide of the Real against the greenback has made Brazilian products even more attractive compared with the competition.
It’s true that there has been much concern over president Jair Bolsonaro’s stated intention to move the Embassy of Brazil in Israel from Tel Aviv to Jerusalem, as a pledge made during the campaign to please some of his voters. However, many sectors of Brazil’s government, with which we are constantly and effectively in touch, understand the importance of Arab countries to the economy, and they aren’t at all interested in damaging this trade partnership. Proof of that is the fact that instead of moving the Embassy, the administration announced the opening of a trade office in Jerusalem. Days later, the president said he intends to visit a yet-to-be-named Arab country in the second half of 2019. Bolsonaro also dined with ambassadors from Arab and Islamic countries in Brasília, the national capital. Our expectation is to keep in touch with the Brazilian government, as we have been, to get the best possible results for bilateral relations.
- Note to the reader: The Brazilian Portuguese term “Syrian-Lebanese” designates Arab immigrants who arrived in Brazil in the late 19th and early 20th century, coming mostly from the areas now known as Syria and Lebanon. At that time, those areas were provinces of the Turkish Ottoman Empire.