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BRAZIL: Doha Failure a ‘Triumph of Protectionism’, Say Trade Sources

Mario Osava

RIO DE JANEIRO, Jul 30 2008 (IPS) - “Protectionism has triumphed,” said the vice president of Brazil’s Foreign Trade Association, José Augusto de Castro, referring to Tuesday’s collapse of the Doha Round of multilateral trade talks in Geneva.

Brazil has lost out because it was interested in the freeing up of trade and has now been left without multilateral agreements, which were its top priority, or bilateral deals, which it had stopped negotiating, said Castro. The consequence, he told IPS, is “isolation.”

But “this is not chaos, life goes on, and everyone should take some time for reflection,” said Pedro de Camargo Neto, the head of the Brazilian association of pork producers and exporters (ABIPECS).

“There have been similar failures in the past,” and Brazil’s strong headway in the global agricultural market did not depend on the previous agreement, reached in the Uruguay Round, which ended in 1994 with the creation of the World Trade Organisation (WTO), Camargo pointed out to IPS.

Improving the agricultural health and food safety system and infrastructure, and overcoming legal and bureaucratic hurdles are the way to continue to conquer new markets, said Camargo who, as a high-level Agriculture Ministry official in 2002, spearheaded the successful legal actions that led to WTO resolutions against U.S. and EU subsidies.

Brazil won the right to impose punitive trade tariffs against the United States for its cotton subsidies, while the EU was forced to modify its sugar policy.

The failure of the Doha Round, which got underway in November 2001 in the capital of Qatar, also represents political losses for Brazil, by dividing the Group of 20 (G20) developing countries, of which it was a leader.

It also drove a wedge into the Southern Common Market (Mercosur) trade bloc (made up of Argentina, Brazil, Paraguay and Uruguay), because Brazil took a different stance than Argentina.

“Alliances shift,” said Camargo, who noted that discrepancies had already been emerging in the G20, because of the divergent interests of Brazil, China and India. While South America’s giant is keen on the opening up of agricultural markets, its two huge Asian partners have emphasised protection of their small farmers.

The G20 was relevant when it emerged at the fifth WTO ministerial conference in Cancún, Mexico in 2003, in the face of U.S. and EU attempts to impose unfavourable conditions on developing countries, said Camargo. But splits in the group had become “inevitable,” he added.

When Brazil took a conciliatory stance with respect to the industrialised world’s proposals, to try to save the emerging trade deal, it agreed to reduce protection for its industry, which Argentina refused to do.

Mercosur gained nothing, since “subsidies and protectionism remain in place,” complained Castro, who said it would take a major effort to heal the divide in the South American trade bloc.

André Nassar, director of the Institute for International Trade Negotiations (ICONE), which advises the government and the agribusiness sector, said a distancing occurred between “defensive and offensive” members of the G20 over the special safeguard mechanism, which would enable developing countries to raise their tariffs in the event of a surge in imports beyond certain levels.

Many had expected these differences to erupt at the defining moment. India defended its right to raise farm tariffs in case of a 10 percent rise in imports, while the proposal approved by the rich nations and Brazil granted that right only in the case of a 40 percent surge.

Brazil wants to see a liberalisation of the rich world’s markets, but of those of China and India as well, with their enormous populations and strong economic growth.

It is important now to “salvage the many points on which agreement was reached,” like the rules for cutting subsidies and tariffs, and the expansion of import quotas, said Nassar. But he told IPS that this will be very difficult to do, now that the talks have collapsed.

To reach a WTO agreement requires a consensus on all points. Brazilian Foreign Minister Celso Amorim said Tuesday that “it is unbelievable that we have failed over one issue,” the safeguards, after nearly seven years of efforts.

Amorim’s role in the negotiations, as Brazil’s representative and the G20 spokesman, will now face a new wave of criticism, especially because of his insistence on the Doha Round as virtually the only priority, as well as on the alliance with other emerging countries like China and India, despite the clear discrepancies between them.

Treating Doha as a priority was only logical, as it was the only area in which farm subsidies could be reduced, the minister argued.

But now there will be new priorities, like the trade negotiations between Mercosur and the EU, he announced.

The collapse of the Doha Round leaves many questions up in the air, but it points to a new world order in the wake of “the polarisation between the United States on one hand, and China and India on the other,” Nassar predicted.

The regrets are not shared by the international farmers movement Vía Campesina. “Luckily, it seems that Doha has failed,” Pedro Stédile, a leader of Brazil’s Landless Workers Movement (MST), which forms part of the global network, commented to IPS.

“The WTO and its members have no mandate, neither from the United Nations nor from their own people, to negotiate anything related to food, which is a global right, and not a commodity,” he argued.

The position taken by Brazil was “ridiculous and servile to the interests of agribusiness and transnational corporations,” because it exchanged the country’s industrial and services market for greater exports of farm products and commodities, with less added value, he maintained.

Mercosur “has no future,” said Stédile, who advocates a South American economic and political union “that would go beyond the question of tariffs.”