Brazil attacks rich nations as 'predatory'

April 17, 2012 at 6:19 AM
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CARTAGENA, Colombia, April 17 (UPI) -- Brazilian President Dilma Rousseff said developed nations' monetary policies threaten to extinguish manufacturing in countries aiming to reduce dependence on income from exports of commodities and raw materials.

In a strongly worded statement before she left a Latin American summit in Colombia early to return to Brazil, Rousseff accused industrialized nations of doing little to stimulate global economy and instead flooding vulnerable emerging markets with unwanted monetary infusions and cheap goods.

Rousseff called "predatory" monetary and trade policies of the industrial nations that posed a threat to local manufacturing.

Brazil blames cash infusions, drawn to its attractive interest rates, for overvaluation of the Brazilian currency and pressures on the country's exports, which are made more expensive by the stronger real.

"Our currencies are appreciated, which turns into an obstacle for the trade of goods and services and turns our economies into possible victims of a deindustrialization process," Rousseff said at a panel discussion, part of the heads of states summit.

Rousseff said Latin American and other emerging economies were within their rights to defend themselves against "monetary flooding" from rich countries and pointed to "defensive" measures that should not be taken as "protectionist" measures.

Brazil in the past has criticized China for flooding the Brazil market with cheap goods but Rousseff's present ire is most directed at Western nations she says is behind "monetary flooding."

Rousseff pointedly attacked European monetary policies which, she said, were damaging emergent markets.

Argentina has been in the forefront of wide-ranging curbs on imports to try to reduce its import bill but Brazil's central bank has also reacted to capital infusions and imports with a tougher tax regime.

Brazilian officials say they fear a monetary backlash from massive cash infusions and continued problems with controlling inflation.

Central Bank President Alexandre Tombini reduced the benchmark rate five times as part of an effort to revive economic growth. Increased import volumes have hit local manufacturing and discouraged investment that could steer the country away from dependence on commodities and raw material exports.

Last month Brazil raised its import tariffs and ordered stimulus measures worth about $35.4 billion.

The current controversy over "monetary flooding" once again has put Latin American-European trade talks on the back burner. EU officials hoped a free trade accord could be reached this year but talks between the EU and Latin America's Mercosur trade bloc have been marked by recrimination.

Mercosur member countries are Argentina, Brazil, Paraguay and Uruguay. The trade pact's associate members are Chile, Colombia, Ecuador and Peru. Venezuela has applied to join as a full member.

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