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Will the crisis in Afghanistan impact Brazilian trade?

   In recent weeks, after the withdrawal of troops from Afghanistan after nearly 20 years of occupation, shocking news broke out about the situation in the country, whose capital, Kabul, and other important cities, were quickly taken over by the fundamentalist Taleban group that, soon after this took over Afghan government control. As a result of this unstable context, uncertainties arise as to how the Brazilian trade will be impacted, but it seems that there will be no significant losses.

 

Bilateral relations of little significance  

   In the diplomatic field, relations between the two countries were established in 1952, even so, a Brazilian embassy was not founded in the country, with this representation being carried out by the Brazilian embassy in Islamabad, Pakistan. During this period, cooperation between countries was not very prominent, having been expressed by the project "Strengthening rural extension in Afghanistan", carried out between 2018 and 2019 under the Basic Agreement for Technical Cooperation (ACT), with the aim of increase food security for Afghan families.  

   Regarding Brazilian exports to the country, according to Leonardo da Paz, a professor at FGV, in an interview with Isto é Dinheiro, Brazil will not feel a major economic impact, as it does not have a significant trade relationship with Afghanistan. The numbers for this trade are not high, having totaled US$32 million in 2019, according to the OEC (Observatory of Economic Complexity). Although this amount was practically double the amount recorded in 2018 (US$16.99 million, according to the Ministry of Foreign Affairs), it is still a modest amount.  

   The main product that makes up the Brazilian export basket to Afghanistan is chicken meat, which, according to the OEC, represented 91% of all this trade in 2019. In smaller percentages, tea and coffee extracts stood out (US$737 thousand) and milk (US$490 thousand). As early as July 2021, before the height of the Afghan crisis, chicken exports had already shown a general decline, as well as to that destination. Therefore, according to the OEC, exports of this product to Afghanistan totaled just US$1.03 million in the month.  

Export agenda with easy flow to other Asian destinations

  Given this context, it is understood that Brazilian exports will not be strongly affected by any possible impediments to trade with Afghanistan. Nor for the producers that carry out this trade, since chicken meat, which for years has been the most expressive product in the export basket to the country, has an excellent flow in other Asian countries, such as China, Japan, Saudi Arabia , the United Arab Emirates, among others. Other products that are slightly important for this export basket can also be easily sold in other places. Such is the example of milk, which has a promising market in the Philippines and the United Arab Emirates, and coffee and tea extracts, which stand out in countries like Japan, Indonesia and Russia.  

Minor imports

  The scenario of imports is even less expressive, as Afghanistan corresponds to less than 0.001% of the products imported by Brazil, according to data from Global Edge. Furthermore, according to OEC information, the main products that make up this list, such as vehicle parts and grapes, can be supplied on a large scale by countries such as Argentina and Chile and with potentially lower import costs.

The importance of assistance from an international consultancy in crisis scenarios

  Finally, it is important to understand that the Afghan context is still very undefined and the real impediments in trade issues will only be known in the future. Therefore, it is important that businessmen who carry out or intend to trade with the country keep mapping alternatives of countries with greater stability for an eventual market exchange. In this scenario, the performance of an international consultancy, such as Prisma, is essential in order to understand in which countries trade will be more effective, through services such as market identification and also lists of suppliers and buyers.

By Giovanna Relva on 08/30/2021  

Sources:

https://bbc.in/3ztJ0aW

https://bit.ly/3t0V9lc

https://bit.ly/3gLz1GQ

https://bit.ly/3t24ERa

https://bit.ly/2Y8cuxb

https://bit.ly/3kJlKiY

https://bit.ly/3t0tG3j