Should Brazil be special for Canada?

by Jean Daudelin (feat. CDFAI)

Postmedia News
July 4, 2012

The relationship between Brazil and Canada has never been so close. A kind of golden age has dawned in bilateral relations, with regular official visits and rising investments and trade. Canada looks ready to give Brazil the importance that South America's stable, democratic and influential giant seems to deserve. Now, if no serious country could afford to neglect Brazil, should Canada really seek more than a fluid and easygoing relationship with South America's colossus?

At face value, Brazil matters a lot: eighth-biggest economy, fifth-largest and fifth most populous country, an agricultural and mining superpower, a major energy producer and soon a significant exporter too. It is also an industrial powerhouse, with a car production industry twice as large as Canada's and three-quarters that of the U.S.

Brazil dominates South America, but as a peaceful and gentle giant, it has proven to be an effective and influential player in global diplomatic circles.

One should be careful, however, not to exaggerate Brazil's importance in the world. The country remains a marginal trader, with less than two per cent of global exports, and its share of global GDP (around 3.4 per cent) has been declining for more than a decade. It now confronts rapid de-industrialization, increasing dependence on commodity exports, and significant domestic hurdles to growth. Brazil's military budget is eaten up by salaries and pensions and its military's hardware is for the most part second-rate.

"Soft" power looks like a different story but, to take two examples, Brazil has signed no trade deal since the mid-1990s and its quest for a permanent seat at the UN Security Council has been an abject failure, gaining little support from fellow emergent powers or from its South American neighbours.

The equation could be different for Canada. Brazil, as the second largest economy in the Americas, represents the most obvious regional option to diversify Canada's trade. The country's large market appeals to Canadian manufacturers, and behind the competition between Bombardier and Embraer lie overlapping value chains in which Canadian companies are profitably playing both sides. Canada has welcomed some of Brazilian multinationals' largest investments, and Brazil's banking and insurance markets look like juicy picks for Canada's financial giants.

As a pacific democracy keen on multilateralism, fellow member of key global governance clubs, and with an active and visible presence in most international forums, Brazil could also represent a valuable ally.

There are cracks in this facade, however. In relative terms, neither country matters for the other as an investment destination or recipient. Total trade with Brazil similarly represents only 0.75 per cent of Canadian imports and exports.

The two countries' global agendas, moreover, are not converging. Brazil and Canada find themselves increasingly confined to the role of primary goods exporters for Asia's industrial powerhouses and thus confront similar problems: export price volatility, overvalued currencies, uncompetitive manufacturing exports and industrial decline.

Yet no common agenda results, and in global governance circles from the UN to the WTO, Brazil and Canada diverge. On democracy and human rights, Canada is much more willing to put sovereignty between brackets, while in the face of nuclear proliferation, Brazil is a much harsher critic of the nuclear monopoly of established powers.

The limited appeal of a special relationship with Canada appears to be clear to Brazil's very "realist" foreign policy establishment. Brazil and Canada have little bearing on one another's status and interests in the world. Obviously, the sometimes infantile confrontations of the past should be avoided. With global governance in flux, surprising convergences will develop and should be built on: as Canada's old partnerships lose their relevance, a sane calculus of interest imposes a new range of options. Brazil should be part of them, but among the many Southern powers whose weight in the world is increasing, there is no reason to give it a special status.

For more on Canada's relationship with Brazil, see the recently released paper from the Canadian Defence & Foreign Affairs Institute: Should Brazil be 'Special' for Canada?

Jean Daudelin is assistant professor with the Norman Paterson School of International Affairs, Carleton University.