When it comes to “mixing friendship and business,” one can hardly achieve consensus. There are those in favor and others who see only drawbacks. Until a few years ago, the prevailing saying in international trade was that where to produce or buy goods and raw materials should be based primarily on operating costs—i.e. where it’s cheaper, the better.
Since the 2008 global financial crisis, the debate about the possible end of globalization has gained momentum. In this context, terms such as “slowbalization” emerged, a combination of the words “slow” and “globalization” to describe a slowdown in socio-economic integration actions among countries. These concepts and beliefs have been widely reviewed in the wake of the COVID-19 pandemic and the Russian advance in Ukraine.
Due to the severe shocks seen in global value chains in recent years, several countries are seeking to implement measures aimed at mitigating future impacts on the supply of goods and services caused by exogenous factors, thus ensuring greater control over the inputs and products that are essential for the full functioning of national economies.
New trends originated from the same aspects that were the drivers of slowbalization are gaining momentum in international trade. “Reshoring” and “onshoring,” which refer to the purchase of goods produced locally or in nearby countries, are examples of actions aimed at making world trade routes more stable, but the big news is the so-called “friendshoring.”
Friendshoring means prioritizing friendly nations and allies in the geopolitical setting, for doing business, whether as buyers or investors, thus relocating supply chains to countries regarded as politically and economically safe or low-risk, to avoid disrupting the trade flow.
In June 2022, US Treasury Secretary Janet Yellen advocated friendshoring as one of the ways to secure greater access to markets, reducing the risks to the US economy and reliable trading partners. In her speech, she criticized countries that currently are “on the fence” and have not joined the group of nations that have publicly implemented sanctions against Russia, thus supporting what she called “international order.” Asked about the prospect of a bipolar global system, with the United States and its allies on one side and China and other countries on the other, Yellen replied that she really this doesn’t happen.
This potential polarization would not necessarily lead to an improvement in world economic circumstances, as shown by a WTO report that estimates a 5% reduction in world GDP in the event of a global economy division into two blocs.
In this world moving towards bipolarity, on which side is Brazil? The correct answer would be: on Brazil’s side. As the world’s third largest food exporter and importer of several agricultural inputs, Brazil does business with the whole world. With China as its main trading partner, and the European Union and the United States as the second and third main destinations for the sector’s exports, Brazilian agribusiness shows a pragmatic stance.
In this geopolitical quarrel, Brazil is seen as a very relevant player, due to the great influence it exerts on the other South American countries and the extent of its natural resources and food production. Brazil still uses just a little of this soft power in the global setting. The strength of Brazilian agribusiness goes far beyond its high competitiveness. This asset’s strategic use can yield significant benefits not only to the sector but to the country as a whole.
*Sueme Mori is the Director of International Relations at the Brazilian Confederation of Agriculture and Livestock (CNA)
*Article originally published on Broadcast Agro/Estadão