| | |  Business News 
Mexico, Brazil Pursue Closer Economic Ties
 Juan David Leal - EFE
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February 25, 2010
| | Mexican President Felipe Calderon (R) and Brazilian counterpart Luiz Inacio Lula da Silva | |
Playa del Carmen, Mexico – Mexican President Felipe Calderon and Brazilian counterpart Luiz Inacio Lula da Silva took the first step toward a potential strategic accord binding Latin America’s two largest economies.
The two leaders signed a memorandum of understanding to begin studying the viability of a so-called Strategic Economic Integration Accord, which would link Mexico, home to 107 million people, and Brazil, with a population of 195 million.
The two countries’ combined gross domestic product is roughly $2.66 trillion, or an estimated 63 percent of the cumulative GDP of Latin America.
The announcement was made after a meeting of Mexican and Brazilian business leaders; the two presidents joined the gathering following the close of the Rio Group summit in the Caribbean resort of Playa del Carmen.
Although he said it is still too early to contemplate a free-trade agreement, Calderon said the goal of the strategic-integration accord would be to “promote (the countries’) economic growth and development ... strengthen their competitiveness and regional presence in international markets” and boost employment.
The idea of a Brazil-Mexico trade accord has been repeatedly rejected by Mexican business leaders, who say the Brazilian economy is more closed than Mexico’s and imposes steeper tariff barriers.
In fact, whereas Mexico’s exports and imports are equivalent to 45 percent of GDP, Brazil’s represent just 22 percent.
But Lula said the conditions are in place for Mexico and Brazil to become partners because they are not adversaries and “much less enemies.”
The Brazilian president said Mexico must turn its gaze to South America and not look only toward the United States, the destination of 80 percent of Mexico’s exports, because “the world is round, not rectangular, and it’s necessary to look at all different places.”
Brazil and Mexico have “all the conditions to be allies,” said Lula, who questioned why Mexican business leaders fear their Brazilian counterparts but not “the Americans, Japanese or Germans.”
Lula also challenged the two countries to host two different gatherings – one for Mexican business leaders in Brazil and another for Brazilian business leaders in Mexico – so that around 500 participants can discuss the similarities between the two nations.
“Brazil is no more dangerous than many of Mexico’s partners, and certainly Mexico is no more dangerous than many partners Brazil has,” Lula said, calling it “a shame” that bilateral trade amounts to just $7 billion a year.
Meanwhile, during the same business gathering attended by Lula and Calderon, Mexican firm Idesa and Brazil’s Braskem announced plans to invest $2.5 billion in a petrochemical complex in Mexico that will produce 1 million tons of ethylene and polyethylene annually and create some 3,000 jobs.
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