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Today is Monday - May/21/2018
Brazil and Iran negotiate agreements to reach US $ 5 billion bilateral trade target

Brazil and Iran negotiate agreements to reach US $ 5 billion bilateral trade target

Governments of the two countries present alternatives to the lack of private financing for exports. Brazilian banks are afraid to maintain relations with the Iranians and suffer punishment for sanctions from the United States

Iran is a strategic country because of its position in Central Asia. In the Middle East it has a consumer market of 80 million people and its economy is growing. Last year, after the suspension of US sanctions, its GDP grew 13% and this potential did not go unnoticed by Brazil. Survey of the National Confederation of Industry (CNI) shows opportunities in at least 203 products from ten Brazilian sectors. The difficulty is how to finance exports, as Brazilian banks do not maintain a financial relationship with Iran for fear of being punished by the United States.
In partnership with the Brazilian Agency for the Promotion of Exports and Investments (Apex-Brasil) and support from the Central Bank of Brazil and the Ministry of Foreign Affairs, CNI organized the Brazil-Iran Economic Relations Seminar this Wednesday (9).
The event was attended by the president of the Central Bank of Iran, Hossein Yaghoobi, and the Iranian ambassador to Brazil Seyed Ali Saghaeyan, as well as Brazilian authorities and businessmen.
Brazil's ambassador to Iran, Rodrigo Azeredo, explained that the new challenge is to convince Brazilian banks that they are not subject to punishment if they negotiate with Iran. In the short term, Azeredo recalled that Iranian banks have a large network of Bank correspondent agreements with institutions in Europe and Asia that can be used by Brazilian institutions.
In addition, the Central Bank of Brazil and Iran began to study the possibility of using the payment system in local currencies, between central banks. "It is clear that this system of payment in local currencies helps, facilitates, but never will replace the banking relationships that are always important," said Azeredo. There is also the possibility of opening a long-term financing line with BNDES, which would be a financial arrangement between governments with negotiated guarantees for structuring projects.
"The reopening of Iran to the world gives us the possibility of moving to a new level of bilateral trade. Today, our trade is in the $ 2.3 billion mark. But there is still a lot to do, especially if we bear in mind the ambitious $ 5 billion mark we have established for bilateral trade, "said Ambassador Santiago Mourão, undersecretary general for International Cooperation, Trade Promotion and Cultural Affairs of Itamaraty.
According to him, in order to advance bilateral trade, the Brazilian government and the Iranian government are committed to finding alternatives and ways to normalize the financial relationship between the two countries. "It is necessary that the private sector, who is the one who operates in the last instance, is on our side. And also be involved in the architecture assembly that allows this flow, "he said.
Hossein Yaghoobi, the president of the Central Bank of Iran, said the sanctions were very heavy for the country. However, they have been working to strengthen the instruments of the financial system, which has been recognized by other BRICS such as China and Russia. At the moment, Iran is focused on a strategy of expanding trade relations and believes that Brazil can be its bridge in Latin America.
"The trade never stops. If you do not have the banking channel, the payment will go through unreliable means. That's what we're talking about: Brazilian assets will be entering Iran at risk, "Yaghoobi said.
According to Carlos Abijaodi, CNI's Director of Industrial Development, there are untapped trade, investment, integration and cooperation opportunities in energy, defense, automotive, chemical, transportation and steel industries, with high tariffs. "At the moment, we are pushing for Mercosur to negotiate a trade agreement with Iran," Abijaodi said. Brazilian International Negotiation expert Fabrízio Panzini recalled that "Brazil faces tariffs ranging from 4% to 40% and the trade agreement is the main way to reduce this cost."
Among other opportunities, APEX-Brazil's Intelligence and Trade coordinator Igor Celeste said that in the next decade Iran must renew its fleet of aircraft with 400 to 500 new aircraft. "In addition, there are opportunities in the beauty sector. Iranians welcome foreign products in this area, and franchises. Yogoberry, for example, is already in the Iranian market," he added.