BRASILIA, (Reuters) – Brazil campaigned hard to get the top job at the World Trade Organization this week but behind closed doors even it acknowledges that the WTO’s main mission – pushing forward in global trade talks – looks for the moment like a lost cause.
Instead, President Dilma Rousseff’s government is moving, albeit cautiously, towards less ambitious bilateral and regional deals that may have a greater chance of success. Rousseff’s hope is that more trade could shake Latin America’s most insular major economy from a surprisingly deep recent slump.
Rousseff was thrilled that Brazilian diplomat Roberto Azevedo won an election on Tuesday to head the Geneva-based WTO, cheering the choice as a victory for developing nations in a trade club long dominated by the rich.
Azevedo’s victory over a Mexican candidate, made possible by support from African nations with which Brazil has worked hard to cultivate ties during the past decade, was also hailed as another sign of Brazil’s growing economic clout. Yet officials in Brasilia who do the heavy lifting on trade matters say their focus remains elsewhere.
With WTO-led talks in limbo for years, several officials told Reuters they have been instructed to prioritize greater integration with the United States and the European Union.
“Brazil made a bet on the WTO years ago. Now we see that the WTO is unlikely to advance any time soon so we need to move toward other deals,” said one official who, like the others, asked for anonymity. “We are waking up to the fact that we are losing market share to others. We need to act.” Those close to Rousseff say she is not a knee-jerk protectionist but has been reluctant to explore trade talks because of economic imbalances still lingering from the 2008-09 global crisis. She has complained that rich nations are waging a “currency war” to weaken their currencies through expansionary monetary policies, unfairly favoring their own exports.
As a result, Rousseff hiked duties on dozens of imported products from cars to glass and iron pipes last year, ruffling the feathers of many trading partners and closing Brazil even further. Trade accounts for just 25 percent of its economy, easily the lowest ratio in Latin America according to the International Monetary Fund, behind peers Venezuela (52 percent), Mexico (59 percent), and Chile (71 percent).
Brazil had long had a reputation more for torpedoing trade talks, rather than pushing them forward. Rousseff’s predecessor, Luiz Inacio Lula da Silva, was instrumental in killing U.S.-led plans for an Americas-wide trade pact last decade, and he also helped stall the Doha round of trade talks by insisting that Washington and Brussels dismantle their agriculture subsidies.