Minas Gerais intensifies trade with Canada

The state, which has already accounted for almost a third of Brazilian exports to that country, now has the support of CCBC to stimulate business  

By Sérgio Siscaro

As has been consistently revealed in recent years, foreign trade between Brazil and Canada has proven increasingly solid – both in terms of exports and imports. In the Brazilian case, this trade complementarity between the two countries is also reflected in some of the federation units; an example that draws attention is Minas Gerais, a state that a few months ago began to have a regional office of the Chamber of Commerce Brazil-Canada (CCBC), dedicated exclusively to strengthening ties between  Minas Gerais and Canadian companies. 

And these ties have shown, throughout the year, a tendency to intensify. According to trade balance data, the trade current (i.e., the sum between exports and imports) between Minas Gerais and Canada totaled US$ (FOB) 1.294 billion between January and October 2022. This total represents an increase of 47.18% compared to the same period in 2021, and corresponds to 14.23% of all trade between Brazil and Canada in the first ten months of 2022. 

Most of this result is due to Minas Gerais’ exports to Canada, which totaled US$ (FOB) 814.37 million, up 19.5% compared to the first ten months of 2021. Sales of golden bulb, with US$ (FOB) 510.27 million, or 62.65% of the total, and of unroasted coffee beans, with US$ (FOB) 107.39 million, corresponding to 13.18% of the total, stood out in the period. 

Imports, on the other hand, saw an even bigger jump: purchases of Canadian products by Minas Gerais between January and October increased 142.2% in the comparison between 2021 and 2022, reaching US$ (FOB) 480.5 million. In this case, the main item was potassium chloride, which registered US$ (FOB) 348 million – or 72.42% of the total. Its predominance is not surprising, since it is used as agricultural fertilizer – and Canada has supplied Brazil’s need for the product, whose normal supply was hampered by the Russian invasion of Ukraine earlier this year. 

Consistent track record

These results confirm a trend that has been observed for years, and that reached its most significant moment in 2020. In that year, the sum of exports and imports between Minas Gerais and Canada totaled US$ (FOB) 1.36 billion – an amount that represented 15.17% of all trade between Brazil and Canada, which in that year totaled US$ (FOB) 6.153 billion. As a point of comparison, in 2010 the trade flow between Minas Gerais and Canada was only US$ (FOB) 471.3 million – an amount that has consistently increased over the last decade. Last year, the amount recorded was US$ (FOB) 1.137 billion, with a 15% share. 

Exports from Minas Gerais to Canada are mainly responsible for this volume of trade. In 2020, a year that also saw the peak of foreign sales from the state to that country, an amount of US$ (FOB) 1.2 billion was recorded – or 28.67% of total Brazilian exports to the Canadian market. In 2010, this total was only US$ (FOB) 205.3 million.  Last year, however, this total declined to US$ (FOB) 877.2 million.  

In the opposite direction, although the numbers are smaller, the same trend of gradual increase was observed in recent years – although with some drops that would soon be recovered. Thus, Minas Gerais’ imports from Canada, which were US$ (FOB) 265.9 million in 2010, increased to US$ (FOB) 455.89 million in 2011, were reduced in the following years due to the decline of the Brazilian economy, and returned to this level in 2021, when they totaled US$ (FOB) 260.097 million – a total that represents 10.1% of all international purchases made by the state from the Canadian market, and shows an advance of 71.4% compared to imports recorded in the previous year, which totaled US$ (FOB) 151.7 million.  

More connections

If these numbers show the resilience of bilateral trade between Minas Gerais and Canada, on the other hand they also suggest a great potential to be explored. According to the person responsible for coordinating the CCBC office in Belo Horizonte, Erik Rodrigues Silveira, there is still much to be done so that Minas Gerais companies can take advantage of the opportunities offered by the Canadian market. “Our companies struggle to reduce costs, pay taxes, and overcome the challenges inherent to the exchange rate variation, but the regulatory systems of any country and the logistical difficulties represent decisive factors for a project involving import and or export.”  

According to him, it is necessary that the companies prepare themselves previously, knowing the foreign trade legislation well and studying the characteristics of the desired market. “We need to know how to relate the various aspects, which start with the Mercosur Common Nomenclature (NCM), go through the description of the product, the regulations, the requirements imposed by government agencies of each country and the overcoming of the logistical design, in order to reduce costs,” he adds. 

In Silveira’s evaluation, the entry into operation of the CCBC office in Belo Horizonte will contribute to increase the commercial exchange between Minas Gerais and Canada. “I can see the feasibility of the long-dreamed-of effective relationship between Brazil and Canada, based on a work that seeks, much more than demonstrating a product or a company, to bring different cultures closer together. Our state can now count on this powerful and effective business channel; the CCBC office has arrived to connect the dots that will allow us to bring solutions to our companies and expand business with Canada”, he concludes. 

The CCBC office in Belo Horizonte was inaugurated at the end of August this year. The new unit will be responsible for encouraging the increase of the state’s commercial exchange with Canada and stimulate the attraction of bilateral investments in several sectors of the economy.