Task Force Brazil, trade multilateralism and the WTO: a medium term perspective

1. Task ForceBrazil, trade multilateralism and the WTO: a medium term perspective WTO Public Forum Geneva, September 26th, 2012

2. The task force: organization and components Components: Ivan Tiago Machado Oliveira José Serrador Leane Cornet Naidin Lia Valls Pereira Pedro da Motta Veiga Pedro de Camargo Neto Coordination: CINDES RabihNasser Ricardo Markwald Sandra Polónia Rios Soraya Rosar Vera Thorstensen

3. Structure of the presentation The conditioning factors affecting Brazil’s positions Characteristics of trade multilateralism for Brazil Brazil's multilateral trade agenda:drivers and components

4. 1. The conditioning factors affecting Brazil’s positions (1) Current economic situation leads to defensive stances in trade negotiations Low economic growth compared to other BRICS Competitiveness deficit of the industrial sector Appreciation of the Brazilian currency De-industrialization debate (Dutch Disease???) Increasing participation of resources intensive sectors in the GDP growth Current dilemma: Adopting industrial policies geared to stopping the changing winds and to sustaining a broadly diversified industrial sector OR Preparing the economy for the productive transformation whose vectors are the industrial and agribusiness segments natural resource-intensive

5. 1. The conditioning factors affecting Brazil’s positions (2) Domestic factors: Economic dimension - Scenario hypothesis: increasing weight of sectors intensive in natural resources transformation of the industry structure: less diversified but more competitive consolidation of internationalised competitive segments in the service sector continuity of the recent trend in Brazilian FDI. Economic drivers lead to more offensive positions, but Brazil would also be concerned with the preservation of “policy spaces” for dealing with productive transformation Political dimension: aspiration for active role and international recognition Political driver lead to assumption of increasing responsibilities

6. 1. The conditioning factors affecting Brazil’s positions (3) External factors: Accession of China and Russia to the WTO: shift in the balance of power within the multilateral trade system Growth in the number of PTAs, which might generate erosion of market access conditions to Brazilian exports Small number of PTAs in which Brazil takes part Emergence of global challenges not directly associated to trade issues, but having intersections with trade (climate change, food security,...) WTO will continue to be the priority forum for Brazil, a position compatible with domestic productive transformation and with the assumption by Brazil of global responsibilities

7. 2. Characteristics of trade multilateralism for Brazil The main characteristics of multilateralism that fits Brazil’s interests: The consolidation and improvement of the existing rules The gradual incorporation of new issues into the agenda Justification for putting emphasis on rules: Capacity of multilateral negotiations to generate improved market access has been drastically reduced Trade flows are growingly being distorted by NTBs Efforts of tariff liberalization should be kept in the multilateral agenda, but they can be pursued in the regional and bilateral fora

8. 3.Brazil's multilateral trade agenda:drivers Three elements were taken into account to define Brazil's thematic agenda in the WTO and its main objectives in the negotiation of the selected issues: Economic and political importance of multilateralism for Brazil's international strategy Profound changes introduced by the emergence of Asia require the strengthening of rules that mitigate risks of unfair competition and of trade conflicts and tensions Prospects of productive transformation of the Brazilian economy, which allows for less defensive positions and for the incorporation of some new issuesin its multilateral trade agenda

9. 3. Brazil's multilateral trade agenda: components (1) Issues associated to the priority to multilateralism Rules for preferential agreements: mechanisms for monitoring and revising preferential agreements and disciplines for preferential rules such as RoO, TBT, SPS Dispute settlement system:central issues are related to the enforcement of the decisions adopted Plurilateralagreements in the WTO: Brazil has traditionally opposed the negotiation of these agreements in the WTO, but plurilaterals with a conditional MFN clause may be necessary to allow progress

10. 3. Brazil's multilateral trade agenda: components (2) Issues associated to global transformations and implications for competition Industrial subsidies: strengthening the disciplines applicable to subsidies and the reintroduction of a broadened concept of non-actionable subsidies, including the subsidies contemplated by Article 8 of the ASCM Agricultural subsidies : progressive convergence of the treatments accorded to industry and agriculture State-owned companies: setting of disciplines that promote transparency in the shareholding control of the companies Non-tariff measures (NTMs): increase transparency regarding the use of public and private standards. Plurilateral agreement on harmonization of NTMs Private norms and standards: this issue introduces a new challenge to the traditional limits of the WTO. This discussion should be incorporated into the WTO agenda as such

11. 3. Brazil's multilateral trade agenda: components (3) Issues related to productive transformation in Brazil Investment: This could be an appropriate moment for reconsidering the traditional Brazilian stance regarding agreements on investments protection (growth of Brazil’s outward FDI) Services: This issue is brought to the Brazilian agenda of priorities due to the need to increase productivity and competitiveness in the services sector as the industry undergoes a productive transformation Climate and Trade: The agenda should incorporaterules for BCAs and for subsidies and enforcement of the disciplines applicable to technical norms Exchange rates and trade: the only point of divergences