Brazil warns global trade reset must not come at developing countries’ expense

Brazil used a debate at the World Trade Organization’s Public Forum in Geneva this week to warn that any new balance in global trade must not be built at the expense of the rest of the world.

The panel, titled “The tectonic plates of trade are moving — a new equilibrium?”, was organized by the Peterson Institute for International Economics and brought together trade officials and policy experts to discuss global trade fragmentation, protectionism and the future of the multilateral trading system.

Tatiana Prazeres, Brazil’s foreign trade secretary at the Ministry of Development, Industry, Trade and Services, said Brazil does not want to take sides in the rivalry among major powers. But she stressed that whatever new trade order emerges cannot be designed only around the interests of the United States, China and the European Union.

The Peterson Institute framed the discussion around a central question: whether, at a time of unstable equilibrium in global trade, it is possible to imagine a new order without falling into deeper economic fragmentation, protectionism and geopolitical confrontation.

Participants examined the evolution of the trading system from the optimism of the mid-1990s to today’s more fragmented geopolitical environment, as well as the need for WTO reform.

Among the challenges cited were the retreat of the United States from global leadership, rising protectionism, China’s aggressive export policies and the advance of artificial intelligence and digitalization.

“The fact that the U.S. is doing less as a provider of security has made the world a worse place economically,” said Adam Posen, president of the Peterson Institute.

“And when we look at a world in which the U.S. has engaged in a number of unilateral trade measures, including tariffs, where China has imposed export restrictions and other countries have followed that path, what stands out is how much the rest of the world has chosen not to retaliate,” Posen said, describing that restraint as positive.

Joe Wallace, from the Office of the U.S. Trade Representative, said the current trade situation reflects long-standing economic imbalances caused by past policy choices in Washington and elsewhere. He argued that the rebalancing sought by Washington is being carried out in an “orderly” way.

Panelists broadly agreed that trade is no longer only about market access. It now also involves national security, technology standards and environmental transitions.

Middle powers seek room to maneuver

The discussion also highlighted how different blocs are dealing with tensions between major powers such as the United States and China.

Cecilia Malmström, a former European Union trade commissioner, said the EU is seeking to avoid being squeezed between superpowers by diversifying partnerships through agreements with Mercosur, India, Indonesia and other countries. To deal with what she called “China Shock 2.0,” the EU may also deploy stronger tools to protect its market.

Prazeres said views on trade have changed sharply since the WTO was created 31 years ago. At the time, she said, there was strong enthusiasm around globalization, fragmented production chains, trade and exposure to foreign markets.

Today, however, trade is seen both as an opportunity and as a risk, the Brazilian official said.

“It is important to keep this in mind because it explains, to some extent, the complexities of trade policy today: trade today is not only about promoting economic opportunities, but also about addressing issues such as security, resilience, industrial policy, sustainability, among others,” Prazeres said.

Those complexities, she added, are tied to the fact that views on trade are now very different from those that prevailed when the WTO was created.

Bringing Brazil’s perspective into the debate — one she said is shared by many countries outside the United States, the European Union and China — Prazeres said:

“We want a functional organization that delivers on its development promises. We do not want an organization that only stabilizes the geopolitical balance among the big players. We want an organization that helps bring efficiency to the global economy while also addressing legitimate policy objectives.”

For Prazeres, the challenge is how to reconcile those two dimensions. A second issue, she said, is how to recognize today’s global realities and take them into account in WTO reform.

“Brazil is a country that does not want to take sides. That is one of the reasons why we want to see a very active and functional WTO. I believe middle powers want to preserve their room for action according to their own interests,” she said.

Brazil says new balance must include developing countries

Prazeres said any new equilibrium in global trade cannot come at the expense of developing countries or smaller members of the system.

“We have the EU, China and the U.S. here. We all agree that an understanding must be reached among the main actors and major powers, but that cannot happen to the detriment of other members, the rest of the world and the needs of developing countries,” she said.

For Brazil, she added, the future of trade cannot be reduced to finding an arrangement that satisfies the largest players.

“In this scenario, I believe Brazil has many partners seeking predictability and stability; partners that believe in trade, partnerships, investment and cooperation,” Prazeres said.

She said it is striking to see the level of interest from countries looking to strengthen relations with partners such as Brazil on more solid foundations, given the current international environment.

“That may seem paradoxical,” she said. “Although we talk a lot about fragmentation, uncertainty and related issues, we see countries willing to strengthen their relationships, doing so in ways that did not seem possible in the past. The negotiations between the EU and Mercosur dragged on for 25 years, and perhaps there is a reason why this has now become possible.”

Prazeres also described Brazil as “a major agricultural power, a renewable energy power and a sustainability power,” saying the country can use those strengths to continue playing a constructive role in the world, including at the WTO.

For Brazil, she said, diversification is essential to increase resilience.

“Turning inward is not a resilience option for us. Broadening and expanding our partnerships, as well as concluding trade agreements with countries willing and able to do so, are measures that increase predictability and improve market-access opportunities for Brazil,” she said.

At the same time, Prazeres said strengthening multilateralism remains an important priority for the country.

On WTO reform, she argued that flexibility will be critical.

“This organization needs to embrace flexibility in a way that takes into account different views on trade, different interests and different speeds. The question is whether we will be able to do that at the necessary pace, given all the uncertainty and fragmentation that exist,” she said.

Source: Valor Econômico

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