Introduction

This document puts in order the analyses of REBRIP on the evolution of negotiations of the Doha Round of the WTO. Being a Brazilian network, the focus of our action has been since the beginning the dispute in the configuration of forces within Brazil which resulted in the definition of a Brazilian negotiating position in the sphere of the WTO. The objective of the document, therefore, is not so much to analyze the whole picture, but rather the role of the Brazilian government in the negotiations and, for our part, the attempt to block the advance of the agreement in Hong Kong.

Before getting into the evaluation and perspectives of the most recent period (i.e., following the July Framework 2004 and Hong Kong), it is important to set down the background elements on the basis of which Brazil operates at the WTO level. Since the Uruguay Round, in the context of the GATT and subsequently at the WTO, Brazilian governments have been looking to secure the liberalization of agricultural trade. From 1986 to 2002, the priority of diverse Brazilian governments has always been the search for the extension of market access for agricultural products in the USA and Europe through the reduction of tariff and non-tariff barriers, the elimination of subsidies to exports, and the substantial reduction of domestic support in these countries. Towards this end, Brazil has generally acted through a coalition of agro-exporting countries (developed and developing) known as the Cairns Group.

Since its beginning, the Lula government has left no doubts as to its commitments in this context, and the priority it places on the WTO and in finding a solution to the Doha Round. From its perspective, the multilateral level will be most favourable to Brazil because the configuration of forces in this sphere are better than in the context of regional and bilateral accords, where Brazil, alone, has to weigh in with the USA and EU. The new government, therefore, invested its efforts in negotiating on two fronts: first, by diluting the process of the FTAA (Free Trade Area of the Americas); and secondly, by increasing the trade viability of its agricultural exports (fundamentally, in answer to the call of agribusiness) and of the larger exporting sectors through the advance of the Doha Round. Together with popular mobilizations in Brazil and from throughout the continent, this governmental strategy helped to obstruct the USA government’s principal strategy of domination in our region, the FTAA. Currently, imperialism continues to seek to impose bilateral free trade agreements on the region, but it has also awoken strong popular forces of resistance in our Latin American countries and also in the United States.

However, as we mentioned above, the Lula government has given continuity to the trade policies of previous governments in one fundamental way: the liberalization of agricultural trade. Lula searched for liberalization through a new policy of alliances in the WTO, where the centrality of the Cairns Group in the Brazilian strategy has given way to a new alliance with the major economies of the developing world, resulting in the creation of the G20, in which context Brazil, South Africa, India and China play a prominent role. On one side, this change in the policy of alliance corresponds to the new government’s political positioning by searching for a major mode of South-South political and economic integration. In fact, Lula places his trade policy within a geopolitical vision of change in line with Brazilian foreign policy regarding the South, in contrast to the previous government of Fernando Henrique Cardoso who backed the FTAA and relations with the USA and Europe.

On the other side, the new policy of alliance carried out by the Brazilian government at the WTO also corresponded to a practical assessment of the inability of the Cairns Group to achieve agricultural liberalization. Just before the ministerial meeting in Cancún, it became clear that the Cairns Group was not prepared to confront the joint USA-EU proposal on agriculture. Even before this, Brazil lead the formation of a practical group whose central object was the elimination of export subsidies and the substantial reduction of domestic support in the EU and USA. In order to move itself closer to India, Brazilian ambitions for market access were, for the time being, reduced. With the same objective of attracting other non-agro-exporting developing countries, the issue of special and differential treatment came to occupy greater space in the agenda of the new group.

Whatever changes had occurred in the politics of alliance and in the content of negotiating positions (for example, the relativization of market access and the incorporation of special and differentiated treatment), the Lula government kept the search for agricultural liberalization at the center of its agenda, having searched for a strategy and politics of alliance that would be at the same time offensive and pragmatic. However, the actions of the current Brazilian government, above all in Cancún, had one political result of the highest relevance: it produced a rupture in the existing (i.e., until 2002) environment in the system of multilateral trade, having altered the balance of power and decision-making process at the WTO.

However, the current government had not altered one central element of recent trade policy: in the name of agricultural liberalization, Brazil always agreed to make concessions in other areas of negotiation; one example being the concessions in intellectual property (i.e., the TRIPS agreement) in the Uruguay Round to obtain a fake agricultural agreement, and more recently, the offer of concessions in NAMA and in services. The position of offering trade-offs in agriculture for other themes was always the mark of Brazilian negotiations, which reflected how much weight agricultural exports held in the political economy and in the generation of surplus in the balance of trade. It also reflected the immense weight that agribusiness holds in the structure of political power in Brazilian society; apparent in, among other examples, the rural bench and in the incapacity of every government to resolve the historical-structural problem that marks Brazilian society most heavily, the latifúndio. No other economic sector has such important organic relations with the structure of power in Brazil.

The other important factor in the formation of the Brazilian negotiating position at the WTO during the Lula government that should be highlighted is the opening of participation to organizations, networks and social movements. In fact, the Lula government advanced the issues of transparency and of our inclusion in the internal debate over the formation of the Brazilian position as never before. However, even if we were included in the game , this didn’t mean that the government adopted our positions. Although there were channels of dialogue, there were always points of divergence with the government’s position at the WTO and in other trade negotiations, and we always made sure that these points were well known.

It still should be mentioned that, in contrast to other governments, there are ministers (for example, of Agrarian Development, of the Environment, and others) currently sitting at the negotiating table who are sensitive to the demands of social movements. The combination of pressures from civil society and from these ministers has guaranteed some advances in the negotiating positions of the country; for example, in the defense of peasant and family based agriculture facing the threats of “free trade”.

Cancun: Brazil Leads the Formation of the G20.

The Lula government faced its first ministerial meeting of the WTO in Cancún. This conference was preceded by various failures in the search for agreements about modalities, a new agricultural law in the USA that expanded subsidies, and a reform in the PAC considered by many to be insufficient. In August 2003, the USA and EU presented a joint proposal on agriculture that contravened the Doha agricultural mandate (which called for the elimination of all subsidies to exports, the substantial reduction of domestic support, and the substantial expansion of access to agricultural markets). Some countries of the Cairns Group seemed inclined to consider the joint proposal as a basis for negotiation. At that moment, it became clear to Brazil that the Cairns Group was not in a position to confront the joint proposal and, from that point on, it proposed to India, Argentina and South Africa the creation of a new coalition that would concentrate on the elimination of subsidies to exports and domestic support. Coming to be called the G20, this group presented an alternative agricultural proposal, and immediately drew the attention of a variety of countries. The new coalition rejected the text proposal of the agricultural facilitator, Perez del Castillo, considering it far too pro-USA and –EU, and demanded that all proposals be taken to Cancún. The creation of the G20, therefore, resulted from the unwillingness of the Cairns Group to combat the proposal together, the incapacity of the group to formulate technical proposals (which was essential to conferring its pragmatic character), and the inclination of the Lula government to search for a new alliance and to confront the USA and EU more directly in the bid for agricultural liberalization.

The creation of the G20 was interpreted in many ways in Brazil. Agribusiness initially opposed the Brazilian government’s new strategy. To some leaders in this sector, the reduction of the centrality of market access was an unacceptable concession. The government, nevertheless, was quickly able to convince agribusiness that the G20 was in reality the most effective way to obtain agricultural liberalization in certain feasible areas (for example, subsidies). Civil society organizations already considered the emergence of the G20 to be an opportunity to, on the one hand, alter the configuration of forces at the WTO with a new configuration that was more favourable to developing countries and, on the other hand, as an opportunity to block the negotiations. In supporting the G20, our understanding was that, through it, it might be possible to signal the necessity of a new “political geography”, however insufficient the effort might still be in the eyes of social movements, since the coalition proposed to challenge the game from within the parameters of free trade, and never showed an interest in launching the basis of new paradigms.

After the failure of Cancún, Brazilian and global civil society groups intensified the dialogue with the G20. They searched at various moments to influence the coalition in the sense of extending their anti-subsidy agenda to an agenda against all new themes, and against the liberalization of services and industrial goods. In all of these contexts, the leaders of the G20 gave the same response to all interlocutors, emphasizing two issues: i) the G20 is a coalition assembled to address agricultural issues, and whatever extension of the group’s agenda would compromise their unity and effectiveness; ii) the G20 is a pragmatic coalition, assembled to negotiate and present its proposals at whatever moment of negotiation it deems necessary.

Even with the return to the negotiations, the G20 maintained this position. At the same time, the theme of market access returned to a place of central importance, and once more, the G20 elaborated proposals that organized negotiations around this theme. In this period, the Group of Five Interested Parties (FIPs) was created, in which context Brazil and Indian were elevated to a small group from which they advocated a return to the Doha Round discussions. Following the logic of the Brazilian negotiating committee, Brazil offered concessions in services, in NAMA, as well, in fact, in agriculture (blue box and sensitive products) in the pragmatic search for an end result that would signal some degree of agricultural liberalization.

Brazilian civil society organizations have analyzed and understood the limitations and opportunities inherent in the G20 since its inception. In the domestic struggle, some organizations and social movements supported the change in the balance of power, betting, in contrast to the government, on the failure of the Doha Round. Others also used the creation of the G20 to expand the domestic struggle with agribusiness, as was the case with the family farm sector, who saw the emergence of the discussion over special and discriminatory treatment in the G20 as an opportunity to continue the fight against agribusiness, and to get the Brazilian government to adopt a new position to defend special and products and special safeguard mechanisms. In both cases, however, these Brazilian organizations and social movements were always conscious that they were dealing with a group that was both pragmatic and pro-accord.

The trade policy of the Lula government increasingly became a theme of debate with the opposition. The right began to aggressively attack the current government over the removal of foreign policy to the South-South axis, having used all its media resources to criticize, for example, the Brazilian proposal to dilute the FTAA negotiations. These sectors even went so far as to attempt to discredit the Minister of International Relations in its role as the coordinator of the trade negotiations for Brazil, to characterize the Brazilian position with respect to the FTAA and even its leadership in the G20 as an ideological and backward strategy that compromised the conclusion of trade agreements which were going to benefit the agribusiness. This same debate is certain to come to the surface once more in the electoral campaign of 2006, where the opposition will take up its criticisms of the supposed intransigence and ideologization of trade negotiations by the current government. This constitutes one more factor that is leading the Lula government to search for an agreement, making concessions even in agriculture.

Hong Kong

Beyond the basic position described above (i.e., Brazil’s interests at the WTO), in Hong Kong, two more factors should be added: in the first place, the Lula government was entering its last year of mandate and the electoral campaign for reelection. Leaving Hong Kong with an agreement will provide an important defensive element against accusations leveled by its political adversaries that the government has made all agreements under negotiation unviable. With the Hong Kong accord, Lula had an important end result to offer in his campaign. The other factor is that, from the point of view of Brazilian negotiators, the institutional survival of the WTO will be fundamental in a moment marked by the paralysis of the negotiations of the FTAA and the EU-Mercosul agreement: remembering that, in the Americas, only Mercosul is not negotiating, or still hasn’t signed, free trade agreements with either the USA or the EU; therefore, there would be many pressures and an enormous political cost to Brazil were it to be singled out as the party responsible for the paralysis of all the negotiating fields.

The combination of these factors left Brazil to bet all its chips on the institutional survival of the WTO. This even meant a modification of its classic negotiating position (i.e., the acceptance of an accord on the basis of a trade-off between gains for agribusiness and concessions in too many other themes). In Hong Kong, Brazil since the beginning announced that it was searching for a demonstration of good will from the USA and EU through the offering of certain symbolic advances, such as the definition of a cutoff date for the elimination of subsidies to exports. This meant shelving the agricultural agenda momentarily of Brazil and the G20, demonstrating a substantial flexibility and willingness in the search for an agreement. In exchange for a vague and cosmetic promise in agriculture, Brazil agreed to settle its commitments in NAMA and services which, if realized, will constitute a high risk to national development. It is clear that this posture in NAMA was made under pressure of the Minister of Finances, who is trying to impose on the Brazilian position the theory that Brazil has “fat” to cut in its industrial tariffs, that such cuts will be beneficial to the competitiveness of Brazilian industry, and also the need to permit the reduction of internal interest rates. In sum, Brazil had need, both of the usual trade and political-electoral variety, to leave Hong Kong with an accord.

Since the July Framework 2004, the global movement, which was always marked by heterogeneous visions and strategies, has progressed in keeping with assessments that converge more and more around the certainty that any agreement will be bad, and that it will be necessary to act to block the advance of the Doha Round. The July Framework put forward a design based on strong inequities, setting as a standard the definitions of “sensitive products” of the USA and EU. Hong Kong proved to be a continuity of the July Package: on one side, it defined the maximum that these two countries would concede in agriculture; but on the other, it failed to define the limits of the concessions to be made by countries in the South in NAMA and in services.

A final note from REBRIP about Hong Kong. “WTO: Fake Steps, Real Dangers” affirms that “the fundamental point, which is the same even for agriculture, is the conclusion that it is vital to follow the negotiation process until the end of discussions of the Round. Even if everything was set, points were introduced that represent real dangers, and that from now on will serve as a reference for negotiations in industrial goods and services. On industrial goods, with the deviation of Brazilian negotiators and others, the adoption of the Swiss formula (higher cuts to major tariffs) was finally adopted. It made official the trade -offs between industrial goods and agricultural goods. If NAMA comes into force it could standarize the primarization of production in developing exporting-countries in agricultural commodities, like Brazil, with a strong, negative effect on the industrial jobs and on the capacity of countries in the South to formulate industrial policies. In services, the principal dangers lie with Annex C, which refers to the possibility of moving plurilateral negotiations forward, in addition to the system of negotiation for offers and requests crystallized in GATS, and to the strengthening of the discussion on governmental procurement.”

Perspectives: the fight to block the current accord at the WTO is part of our fight to change the current economic model.

We believe that, if the Brazilian government maintains its current negotiating position, the agreement will only be avoided if organized civil society can show Brazilian public opinion the damage it will bring, and if it gains the active support of economic and social sectors that will be affected if these concessions are made. Pressure must be mounted from civil society against concessions in key themes being negotiated, and particularly in those which depend on the progression of the Round.
However, we have a short and uncertain calendar year, given the fact that decisive moments are still unresolved in Geneva, the fact that Parliament is moving towards elections, and also that nothing and no-one in Brazil will be working in June and July due to the World Cup.

Our perspective must be to make the potential losses to Brazilian society resulting from the Hong Kong accord as visible as possible, and to join with civil society in putting pressure on Brazilian negotiators against concessions in these areas. We understand that the more rapidly that pressure i