THE BLOG

An Anchored Ship

08/06/2013 08:28 am ET | Updated Oct 05, 2013

When do we allow for ideology above economic reasons, of the market and competitiveness, anchoring a large Brazilian trade ship at the port of small regional claims?

At the Mercosur (the economic and political agreement among Argentina, Brazil, Paraguay, Uruguay, and Venezuela) summit 15 days ago in Montevideo, political issues once again dominated discussions and resolutions of the group: the rejection of U.S. spying, the blocking of European airspace to the Bolivian aircraft, and the support of Argentine sovereignty over the Malvinas ( Falkland) Islands.

These are important matters, but commercial negotiations capable of activities that generate income and may, in fact, make the country grow, did not advance.

The final statements only reaffirmed support for the completion of the Doha Round of the World Trade Organization, at a standstill since 2008. For lack of discussion, the obvious was stated.

The commitment to continue negotiating with the European Union was reiterated, but there was no delving into the difficulties in consolidating the joint offer of Mercosur.

It was emphasized that the purpose of the current block is to form a "joint venture" and that "the integration cannot be a child (result) of the market." It is difficult to agree with this argument, because what produces wealth is the market.

The meeting showed trade was not a priority of the agenda. It was only used as a justification of integration. Positive bloc sales numbers were presented, which multiplied by 12 since the creation of Mercosur (1991), while trade with the world is eight times higher.

The figures show the size of the misconception: Brazil's trade with Mercosur was $ 53.1 billion in 2011 and 9 percent lower in 2012. With the rest of the world it was $429 billion.
All trade between Mercosur and the world in 2011 (U.S. $824 billion) accounted for only 4.6 percent of the global movement ($17.8 trillion).

Nobody mentioned what could have been the rise of foreign trade, if the Free Trade Area of the Americas (FTAA) were implemented, which had been proposed in 1994 and abandoned in 2005. The integration led by the Americans, already providing for Chinese expansion, would create a market with 850 million people and a GDP seven times greater than the Mercosur.
Even without the FTAA, the Mercosur trade figures could be higher if the market opening of the Southern Cone was complete.

The Uruguayan President, José Mujica, even claimed that "we have to talk so much about free trade because we do not have free trade." And he not only defended the execution of agreements within Mercosur, but the opening of negotiations with China's largest trading partner in Latin America.

Bilateral and regional free trade agreements are dividing the Americas of the Atlantic and Pacific and are not the only ones to reevaluate strategies trade integration.

Celebrating 20 years of the North American Free Trade Agreement (NAFTA), the U.S. is studying the relevance of the bloc and a possible reopening of negotiations to modernize the agreed upon rules. And us, when we will be more pragmatic? When will we learn to separate political agendas from business?

China is a notorious example of economic and commercial pragmatism. Practiced in "socialism with Chinese characteristics", which led to more than a decade of growth in the double digits and consistent international positioning, has over 11 percent of world trade.
Here, our "capitalism with Brazilian characteristics" will lead us to isolation.

I agree with President Mujica: you need to negotiate with China, the main destination of our exports. And we cannot lose the agreement with the Europeans.

For now, we are ahead of the Americans -- with their shale gas -- in this negotiation that is fundamental to agricultural trade. But there is no time to lose.

In the first half, the balance of foreign trade of Brazil was the worst in the entire history of the Ministry of Development, Industry and Foreign Trade, started in 1993.

And in Montevideo, again, Brazilian diplomacy has lost the opportunity to discuss the trade. Did it not realize that it's time to raise the anchor of our ship?