French wine
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Maroeconimic Study/Presentation when it comes to exporting French Wine to Brazil
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French wine
- 1. Exporting French Wine to Brazil George Al Moukar, Habib Abou Saleh, Aurelien Foure, Rodolfo Mitchell, Rafael Mohrez
- 3. Brazil's monetary policy is aimed at curbing inflation and not easing currency volatility Monetary policy: Selic 11% Vs Current inflation 6% Inflation forecasted at 6.24% for the next 12 months. Monetary Policy
- 4. Monetary Policy Presidential election in October 2014 (Mrs Dilma Roussef) High uncertainty for future investments
- 5. Government spending is increasing however the majority of the investments are related with social programs. Fiscal Policy
- 6. Brazil Trade Balance: Imports
- 7. Brazil Trade Balance: Imports
- 8. There is a risk of currency depreciation which makes imports from foreign countries more expensive Brazil is moving towards managed or “dirty” floating systems. Foreign Exchange Policy
- 9. Propositions to hinder the expansion of imported wine: Tariffs ( 27% to 55%) and Quotas Imposing a minimum price Portuguese front labels compulsory The EU, as the main supplier for wine imports in Brazil, continued to insist on the G20 commitments. Brazil Back off her proposition Wine Import and Protectionism in Brazil
- 10. Assessment of Opportunities and Risks OPPORTUNITIES Growing GDP per capita Decreasing unemployment rate Increasing population Commitment from Central bank to decrease inflation Increasing governmental expenditures Strong trading relationship between Brazil and E.U Dirty floating system RISKS High inflation rate Political instability Currency depreciation Possible future protectionism policies
Editor's Notes
- Protectionism Proposal: Claiming that that imported wines “are causing serious damage to the national wine industry” based on analyses of sales and production data covering the period January 2006 to December 2010 Proposals were announced in mid-March 2012 to hinder the expansion of imported wine into the fast-growing economy using measures such as increasing tariffs from 27% to 55% and introducing country by county quotas. Other measures suggested included imposing a minimum price, and making Portuguese front labels compulsory as well as banning terms such as organic and biodynamic. The temporary protection measure, known in trade parlance as a "safeguard," has been hailed by some winery owners as their only possible salvation. They argue that Brazil's overvalued currency, high taxes and other soaring costs have left them unable to compete with imports. EU commission Reaction: The Commission services concerned are well aware of the situation and actions have already been taken, both at technical and political level. The Commission is following all the legal steps of the procedure launched by Brazil by preparing a submission to contest the grounds of this investigation. A letter sent by the Member of the Commission responsible for Agriculture and Rural Development on 15th March recalled Brazilian authorities' commitments taken in the G20 meetings, notably to refrain from taking trade protectionist measures. Wine exports to Brazil are a key market for European producers. The EU, as the main supplier for wine imports in Brazil, will therefore continue to insist that these G20 commitments be upheld. No response has been received so far to the letter sent by the Member of the Commission responsible for Agriculture and Rural Development. At this stage no measure has been taken that could affect European production and exports. In the event that safeguard measures are implemented, these would certainly affect the import of wines into the Brazilian market for European producers. Brazil Strategy: The Brazilian government has avoided a campaign to put quotas on imported wines by striking a deal to give wine more shelf space in the country's supermarkets. The Brazilian Wine Institute (Wines of Brazil) has dropped calls for greater protection of domestic wines in return for the deal, which it has agreed with wine importers, government and ABRAS, the Brazilian Association of Supermarkets. Figure: Increasing Tariffs and Adopting Quotas can harm the domestic economy as when Tariffs and quotas are introduced the domestic economy ends up with dead weight loss. (I can use the board to explain that).