Trade integration between Brazil and China

Abstract

The objective of the study is to analyze trade opportunities based on a simulation of a trade agreement between Brazil and China, seeking to identify the sectors most benefited by the eventual agreement. The products are classified according to their degree of technological intensity according to the OECD criteria and the computable general equilibrium model was used based on data from the Global Trade Analysis Project (GTAP), version 9. The results show that the scenario of the reciprocal elimination of import tariffs between Brazil and China would create two major benefits for Brazil. The first would be the change of the current bilateral trade pattern, in which Brazil currently exports commodities and imports medium and medium high technology products from China. The simulation showed that there would be a growth of bilateral trade concentrated in products of low and medium low technological content, stimulating Brazilian industrial production. The second gain would be associated with an increase in welfare, due in particular to greater allocative efficiency. Although still below the gain obtained from China, it would reach $ 2,373 million.