Brazil\u2019s strategy for growth over the past decade has favored more than just consumption over investment, and more than ad hoc fiscal incentives for companies and sectors blessed by the country\u2019s \u2018local content\u2019 industrial policy. At its core, Brazil\u2019s economic strategy is the expression of an approach that is mostly insular and which prioritizes its domestic market over a more incisive interaction with the global economy.
From an international relations perspective, this approach reveals a great deal about Brazil\u2019s lack of a sophisticated project in terms of both influence and prosperity. Present-day Brazil, where significant economic expansion has been kept at bay for more than three years, is the result of a political economy of ideological preferences, with a strong accent on political affinities and less attention to economic pragmatism.
Globally, Brazil\u2019s political discourse has sounded much louder over the past decade than have its cross-border economic achievements. The country\u2019s idea of its global reputation is intertwined primarily with bringing the United Nations system up to date: becoming a permanent member of the Security Council, strengthening ties among Latin American countries, and praising the benefits of South-South cooperation; in short, a foreign policy permeated by \u2018good intentions\u2019 and \u2018balanced\u2019 relations with the world\u2019s top players.
But the fact is that recent attempts by Brazil to build strategic political partnerships that could bring economic benefits, such as with China or France, have been unilateral in most cases. Brazil\u2019s bilateral trade with China has increased tenfold in the past decade. But that has been mostly driven by dramatic growth in China\u2019s infrastructure and consumer market, and its consequent voracious appetite for the mineral and agricultural commodities in which Brazil has clear comparative advantages. The result? One ton of Brazilian exports to China is worth about $200. One ton of Chinese exports to Brazil is worth more than $2,000. That could hardly be called a partnership.
Brazil\u2019s interests in Africa are overshadowed by the expanding outreach of Chinese corporations. UN reform is nowhere near the horizon. And the various geometries fostered by Brazil in Latin America, either using Mercosur, the Union of South American Nations, or the Community of Latin American and Caribbean States, yield plenty of speeches on how the world should be made more equitable \u2013 and few, if any, tangible economic results.
Brazil\u2019s global agenda has prioritized its political objectives \u2013 modulated by the ideological preferences of the day \u2013 over economic initiatives that might have included more bilateral free-trade agreements. Since Mercosur was created in the early 1990s, Brazil has only concluded three FTAs (with Egypt, Israel and Palestine), while Mexico, since NAFTA, has put more than 40 FTAs in place. Brazil\u2019s ideological biases over the past decade\u00a0\u2013 coupled with the finest breed of protectionism-prone conservatives in the US \u2013 have helped put the idea of a Free Trade Area of the Americas to rest.
The low priority Brazil has put on its foreign economic goals has prevented a more aggressive stance in trade and investment promotion. Brazil should have strengthened and expanded its ambitious APEX \u2013 a trade and investment promotion agency founded during the Fernando Henrique Cardoso administration in the 1990s \u2013 which now consists of a few dozen officials based mostly in Bras\u00edlia. Instead of setting up muscular business bureaus in the global cities of North America, Europe or Asia, Brazilian strategists believed themselves to be taking steps toward greater global stature by opening diplomatic posts in cities like Baku, Belmopan, Basse-Terre, Castries, Conakry, Cotonou, Khartoum, Gaborone, Malabo, Nouakchott, Roseau, St George\u2019s, St John\u2019s, and Ouagadougou.
Seemingly clueless of \u2013 or oblivious to \u2013 the forces driving the global economy, Brazil was recently surprised to learn that the United States and the European Union were working toward an FTA to come into force in 2015. As news of the plan came out, a high-ranking official in Brazil\u2019s presidency told newspapers Brazil had been following ongoing negotiations \u201cwithout the hastiness of a\u00a0subordinate.\u201d
Brazil should decide whether it wants trade to be a driver of its economic development. The country\u2019s economic relations with its Latin American cousins, given their small scale as buying markets, represent a low ceiling. Meanwhile, the more dynamic economies of Latin America \u2013 Colombia, Peru, Chile and Mexico \u2013 are reconfiguring their strategies and joining forces in an FTA of their own, one that will entertain an open trade dialogue with the US.
As for further access to Europe\u2019s markets, Brazil\u2019s negotiating position is rendered less mobile by the limits imposed under its membership of Mercosur. The diametrically opposed views of the Mercosur and European Union countries \u2013 especially when it comes to agriculture \u2013 prevent negotiations from advancing to other areas. Were Brazil to make its local content requirements more flexible, particularly in areas related to infrastructure, transport and logistics, a new phase in Brazil\u2019s economic relations with Europe could be launched. But that would be going against Brazil\u2019s current industrial policy mantra.
When it comes to the BRICs, Brazil certainly revels in China\u2019s demand for its low-value-added exports. But Brazilian industry lacks the stamina to face China\u2019s hypercompetitiveness \u2013 so no FTA in sight here. Russia and India have great potential as trading partners, but they lack the complementarities in both geography and natural resources that are conducive to forming economic blocs.
The BRICS will coordinate common positions in economic and political forums. They will certainly trade more among themselves. They may even come up with preferential credit lines, or even a BRICS Bank, to help finance infrastructure projects. But given the scale of the issues in which their interests do not converge, the bloc will never form an FTA, much less a vertical, deeply integrated economic zone.
As a consequence, Brazil, especially in comparative terms, will keep a low profile in global economic statistics. The country\u2019s share of international trade is only about one percent. The sum of all its imports and exports represents 18% of Brazil\u2019s GDP. Its share of world GDP, at 2.9%, is unchanged since 2002. With the watershed event of the US-EU Transatlantic FTA now in the making, Brazil should get its act together and add some urgency to the idea of defining its place on the map of 21st century trade and investment.
If Brazil made the right choices now, it could no doubt use the productivity and competitiveness of its agro-energy sector to help foster a tech-intensive, globally connected economy. Otherwise, if it continues to shun interaction with the most important markets of the world, it will be rendered an ever less relevant, \u2018bloc-less\u2019 economic player.<\/p>\n","protected":false},"excerpt":{"rendered":"
Brazil needs a new trade and investment strategy, but so far the country seems to prioritise politics over economics.<\/p>\n","protected":false},"author":2,"featured_media":3021,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14],"tags":[],"country":[59],"authors":[627],"class_list":["post-3020","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinions","country-brazil","authors-troyjo-marcos"],"acf":[],"yoast_head":"\n