“Until when will we allow ideology to prevail over economics, markets, competitiveness grounding the great vessel of Brazilian trade in the port of little regional pretensions”, asks Katia Abreu in a column published in Folha de Sao Paulo openly criticizing the administration of Dilma Rousseff for its Mercosur policy and the results of the recent Montevideo summit.
Katia Abreu is a Senator but equally important the most relevant and influential farmers’ leader in Brazil, an industry that represents the most dynamic sector of the country’s economy and together with mineral account for 65% of Brazil’s exports.
Senator Abreu writes that at the last Mercosur summit in Montevideo once again political issues prevailed, such as US espionage, the closing of air space for the Bolivian presidency aircraft and the Argentine sovereignty demand over the Malvinas Islands.
“Sure, they are important but trade negotiations capable of launching activities that create wealth, jobs and make the country grow, did not advance. Brazilian diplomacy yet again lost another golden opportunity to discuss trade and markets”.
Likewise the final declarations supported the conclusion of the World Trade Organization Doha Round stalled since 2008, continuing negotiations with the EU, but not a word about the difficulties encountered to agree on a Mercosur common proposal to present before Brussels.
“The summit underlined that the current target of the block is to create a ‘common society” and that ‘integration can’t be the daughter of markets’. It’s hard to agree with such argument because markets create wealth”
Senator Abreu adds that positive inter-block trade stats were displayed showing that since the creation of Mercosur (1991) trade has jumped 12 fold while with the rest of the world eight fold. But the stats also show the magnitude of the erroneous approach: Brazil/Mercosur trade in 2011 was 53bn dollars and 9% less in 2012, while with the rest of the world it reached 429bn dollars.
Mercosur trade with the world in 2011 was 824bn dollars, less that 4,6% of the overall global 17.8 trillion dollars. Further more there was no mention to what could have happened if the ALCA (Free trade of the Americas) proposed in 1994 and dumped in 2005, had gone forward. The US which already anticipated the surge of China, had proposed the creation of a market of 850 million consumers and a GDP, seven times that of Mercosur.
But even without ALCA, Mercosur trade could have a far better performance if the Southern Cone countries opened their markets.
“I agree with Uruguayan president Jose Mujica who complained ‘we keep talking about free trade, because we don’t have free trade’, and strongly supports making effective Mercosur agreements and opening to China, the main trade partner of Latinamerica”.
Senator Abreu added that bilateral and regional free trade agreements are dividing the Americas in Atlantic and Pacific, “and we are the only ones that keep reassessing strategies of trade integration. When will we learn to separate political and trade agendas?”
China is a notorious example of economic and trade pragmatism: it implements a ‘Socialism with Chinese characteristics” which in a decade of double digit growth ensured international insertion and now represents over 11% of world trade, points out the farmers’ leader.
And “here in Brazil our capitalism with Brazilian characteristics is leading us straight to isolation. We have no time to lose, in the first half of the year Brazil witnessed the worst performance of our trade balance since 1993”.
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