Commercial Relations: Brazil and Cuba

Patrick Bruha

Staff Writer
The Brazil Business

Updated

11 July 2014

Relations between Cuba and other countries worldwide became fractured after Castro’s successful Cuban Revolution in 1959 and, with the fall of the Soviet Union in 1991, they became even more so. But, since Cuba re-established diplomatic relations with Brazil in June 1986, Brazil and Cuba have made great efforts to build trust and ties with the effects being felt today.

In this article, we will cover the history and numbers behind Brazil and Cuba´s commercial relations.

First steps

Despite the Brazilian approach to South-South ties and its claims for the Third World insertion in the international scenario starting at the beginning of the 1960s and mid 1980s, diplomatic relations between Brazil and Cuba had to wait for Brazil’s re-democratization to be re-established, mainly due to ideological conflicts between Castro’s communist Cuba and Brazil’s military dictatorship.

In an attempt to project itself as the main protagonist for Latin America, Brazil aimed for regional leadership. That meant firstly decreasing the United State’s influence over South America, and then, using Central America’s reluctance to align with the United States, over that part as well. Brazil was asserting its position as the central figure in Latin America.

On 14th June 1986, Brazil and Cuba officially re-established their Diplomatic Relations. Since then, there was an initial period of intense diplomatic exchange followed by academic, and finally commercial exchanges, that can be seen, including five meetings by the heads of state, with four of them happening after 2008.

Commercial relations: Brazil and Cuba

The trade balance between Brazil and Cuba has always had a main characteristic: deficit to Cuba and surplus to Brazil. But, that has never hindered commercial relations between the two countries.

Cuba was the 70th most important Brazilian trading partner, accounting for 0.13% of Brazilian foreign trade in 2013. Between 2009 and 2013, Brazil's trade with Cuba grew 89%, from USD 331 million to USD 625 million. During this period, exports grew by 90.5% and imports by 81%. The balance of trade is favorable to Brazil, registering a surplus of USD 432 million in 2013.

Brazilian Exports to Cuba

Grains like rice and corn are the main Brazilian exports to Cuba. In 2013, grains amounted to 20% of the total value of Brazilian exports, followed by vegetable oils like soybean oil, refined and raw with, 15.5% of the share. Mechanical machinery like harvesting and cleaning machines that filter the grains and dried vegetables, cooling systems and heat pumps represented 9.3%.

Brazil was the third largest country in terms of exports to Cuba, amounting to USD 568 million as of 2012, 8.9% of the total value of Cuban Imports

Brazilian Imports from Cuba

Manufactured products accounted for almost all Cuban imports by Brazil in 2013, especially pharmaceutical products. Pharmaceutical products like extracts of glands, blood fractions and immunological products prepared as medicines were the main Cuban products imported by Brazil in 2013, representing 96.5% of the total value of exports from Cuba. Tobacco products had a share of 1.7% and cement and plaster represented 1.5% of the total value of exports.

Brazil was the fourth largest importer of Cuban products as of 2013, importing USD 93.5 million, 3.8% of the total value of Cuban exports.

Bilateral Relations

In 1995, Cuba joined the World Trade Organization, opening the country to foreign capital and tourism. But even before that, relations between Brazil and Cuba were involved in mechanisms and agreements for cooperation and there are more being signed at present.

Mechanisms and agreements for cooperation

Scientific, Technical and Technological Cooperation Agreement: first signed in 1997, twelve projects in the areas of agriculture, geology, health, banking management and meteorology have been added to the original agreement up to 2011.

The Memorandum of Understanding on Cooperation on Health Education: signed in 2003, aiming to improve health education, since Cuba has one of the highest rated public healthcare systems in the world.

Judicial Cooperation Agreement concerning Penal Law: signed in 2002.

Mais Médicos program: signed on 8 July 2013, the program aims to cover the shortage of doctors in the cities of rural areas and the suburbs of large cities in Brazil. The program intends to relocate up to 15,000 cuban doctors.

APEX office in Havana

It is important to note that an APEX, the Brazilian Agency for the Promotion of Exports and Investments, office opened in Havana in 2008. APEX offices are only present in Miami, Beijing, Brussels, Moscow, Dubai, Luanda, and now Havana.

This represents the economic intentions of Brazil towards Cuba. Reports and business delegations are organized by APEX to Cuba to promote Brazilian investments by private and state companies in Cuba, directed mainly to the Mariel Port, center of the new Economic Development Zone in Cuba.

Mariel Port Investments

The Brazilian government’s development bank, BNDES, is investing almost USD 1 billion of subsidized credit into Cuba to finance the renovation of the Port of Mariel. The joint work began in 2011, and will become the first Economic Development Zone created on the island.

The Mariel Economic Development Zone is similar to the Economic Development Zone in China, where the Chinese government gives them special - more free-market oriented - economic policies and flexible governmental measures.

This Economic Development Zone around Mariel is part of the economic reforms that president Raul Castro is implementing to “update” the Cuban socialist model, and aims to become an engine for the depressed economy of the island by attracting foreign capital.