Brazil Buys Bolivian Textiles: When the Value of a Dollar Is Worth so Much More

September 2, 2009

by Eliot Brockner

How far can $21 million go?

In terms of Brazil’s real GDP, it is a drop in the bucket. In terms of its impact on regional relations, it is far more significant. On August 23 , Brazilian President Luiz Inácio Lula da Silva announced that Brazil would open up its market to $21 million worth of tariff-free Bolivian textiles. The amount accounts for .001 percent of Brazilian GDP according to the IMF. Not surprisingly, it was not the amount that made the announcement newsworthy. While addressing thousands of Bolivians on an official state visit there during the week of  August 21, Lula declared that the sum is equal to the amount that Bolivian textile manufacturers would lose because of Washington’s refusal to renew the terms of the Andean Trade Promotion and Drug Eradication Act (ATPDEA) that used to guarantee certain Bolivian exports, including the textiles in question, tariff-free entry to the U.S. market.

The new agreement is made for PR. Bolivian-U.S. relations have deteriorated rapidly within the past year, and the rift has led Bolivian President Evo Morales to search for allies and strategic partners to fill the gap. All throughout the region, U.S. influence is waning, and Brazil is emerging as the regional leader championing a dramatic shift in hemispheric relations. Rather than having significant economic value, importing Bolivian textiles that previously were destined for the United States is a perfect opportunity for Brazil to emphasize how the tide is changing, and perhaps more importantly, how Brazil cares about supporting industry amongst its immediate neighbors. As Brazil has increased its presence on the continent, the expansion has not always been so smooth.

It is not the first time Brazil has done something like this. This July, Brazil announced a plan to triple the current amount paid to Paraguay for energy generated at the Itaipu Hydroelectric Dam. Once again, the money was not as significant as the notion that Lula is willing to negotiate with his Paraguayan counterpart. Given the strategic relevance of the Brazil-Paraguay relationship on regional security, this is an important gesture.
There may be another motive to the timing of the event, which coincided with the week South American leaders met for the re-convening of Unasur to discuss the expansion of the U.S. presence in Colombia. Brazil has expressed a clear interest and involvement in ultimately establishing Unasur as the vehicle for regional integration in South America. Although UNASUR’s president rotates every year, Lula, as the president of the bloc’s most powerful member, is often associated with it. It is also worth noting that the first Unasur meeting took place in Brasília in September 2005.

Tensions in the region are high at the moment. Since the March 2008 raid by Colombian forces in Ecuadorian territory, sovereignty has been a hot button issue in the Andes, and its sensitivity is manifest across the continent. With the exception of Peru’s Alan Garcia, South American leaders have expressed concern to varying degrees about Colombia’s granting U.S. armed forces access to up to seven military bases. There is an ongoing protest from Peru about an agreement signed by Chile and Bolivia over Bolivia’s access to the Pacific via a massive highway. Additionally, South America finds itself in the midst of a mini arms race. Between 2007 and 2008, military spending increased 30 percent in Latin America to an unprecedented $51.1 billion, and Bolivia’s military expenditures are the highest they’ve been in 20 years. 

If UNASUR is to ever emerge from its infant stages, it will need to have some evidence of success, which will require a certain level of harmony. Brazil, who is in many ways the de facto leader of the bloc, needs all the help it can get in rallying its neighbors together not just for the sake of UNASUR, but for its own economic and political interests in the region. Much has been written about Lula’s adeptness as a diplomat, and the opening of Brazil’s market to Bolivian textiles is a good example of that. It demonstrates Brazil’s ability to fill in for the absence of an economic powerhouse and interest in helping out its neighbors. Whether these allegiances will pay off for Brazil on a larger scale remains to be seen.

*Eliot Brockner is an independent media analyst and writer focusing on policy, security, and crime in Latin America and U.S.-Latin American relations.

Tags:: Bolivian textiles, Brazil, U.S. presence in Latin America, UNASUR

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