CGD in the News

Letter to The Editor: Attack on Brazil Abounds in Ironies (Financial Times)

January 15, 2010

Sir, Peter Hakim (October 22) refers to Brazil's "reputation as a spoiler", failing to take leadership in the face of its own "broadly distrustful public and divided business community". Two ironies jump out here.

First, surely those are the reasons the Brazilian government needs to bring home some clear gains from any trade deal. We can label this behaviour obstructionist and ideological, or recognise that it is in the longstanding tradition established by the US and other industrial democracies, of managing domestic resistance to freer trade via mercantilist trading of "concessions". What the Brazilians need from any trade deal is better access to agricultural markets in the US and Europe, with minimum risks to its industrial sectors that are still not globally competitive. We should not be surprised that on this score it is responding to its own obvious commercial and business interests, and insisting that agriculture be higher on the negotiating agenda than services and intellectual property rights. In fact, what is new is that Brazil has sufficient market power to have negotiating clout.

Second, a more delicious irony. Mr Hakim's description of Brazil sounds like the US itself, where the public increasingly doubts the benefits of more open trade, and business interests are divided - between steel, sugar, cotton and textile producers hanging on to protection, and banking, insurance and pharmaceuticals companies pushing to open new investment and services markets. How odd to call on the Brazilians for disinterested leadership, when it is the US, more tangled than ever in the web of its own special interests, that is faltering in its grand tradition of leading the free world towards an open rules-based trade system.

Rescuing the Free Trade Agreement of the Americas is surely up to the US more than Brazil. And the rescue of the Doha development round awaits leadership from the US and Europe, not apologies or surrender or the weakening of the new developing countries' negotiating coalition led by Brazil, India, China and South Africa.