Why does Brazil want to lead the WTO? Susanne Gratius is a senior researcher at the Madrid-based think tank FRIDE Since 1 September 2013, the Brazilian diplomat Roberto Azevêdo is Director General of the World Trade Organisation (WTO). The insider and former ambassador of the organisation in Geneva won the race among nine candidates, including his principal rival, the former Mexican trade minister Herminio Blanco, who counted on the backing of the United States. This is the second time since the creation of the organisation in 1995 that a representative from a non-traditional power leads the WTO and the first time that a Latin American holds the chair. The Brazilian leadership coincides with a clear decline of the WTO in the past five years, mainly due to the paralysis of the Doha round on trade liberalisation and the global financial crisis. In this period, multilateralism has been replaced by bilateral and mini-lateral formulae for trade liberalisation and free trade agreements (FTAs). The most prominent examples of this trend are the two ‘Ts’: negotiations between the European Union (EU) and the United States to conclude a Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Partnership Agreement (TPP) among 12 countries, including the US. Brazil is not involved in either the Transatlantic or the Pacific FTA-processes. As a Mercosur member state, Brazil cannot sign bilateral trade deals or take part in mini-lateral negotiations without counting on the rest of its partners (Argentina, Paraguay, Uruguay, Venezuela and, in the near future, Bolivia). For Brazil, rather than a destiny – as former President Fernando Henrique Cardoso once said – Mercosur has become a straitjacket for external agreements opposed by Argentina, Bolivia, and Venezuela. In fact, Brazil is becoming increasingly isolated in the global race for trade and investment deals. While Chile has already signed 16 and Mexico 12 free trade agreements with third countries, Mercosur has only three: with Egypt, Israel and Palestine – these countries account for less than 1 per cent of the bloc’s total trade. The EU is Mercosur's main trade partner and investor, accounting for 20 per cent of the bloc’s imports and exports. Nonetheless, EU-Mercosur negotiations over an association agreement, which started in 2000, are in a state of permanent deadlock due to Europe’s unwillingness to make concessions on agriculture and the EU’s demand for less protectionism on industrial products and services on behalf of Mercosur member states, including reluctant Argentina and Venezuela. As a result, Brazil sees itself increasingly excluded from the ongoing global trend towards trade liberalisation. Similar to the United States and other countries with a large domestic market, trade accounts for a relatively small percentage Brazil’s GDP: around 23 per cent. Brazil is clearly not a global trader: its share on global exports and imports is less than 2 per cent. Moreover, protectionism of local industries is particularly high. To compensate for a re-valued real, last year the Brazilian government decided to increase the import tariffs of a list of 100 products, including steel, rubber tires, chemicals and potatoes. But if free trade is not a relevant path for Brazil’s global projection, why did the country campaign for WTO leadership? There are at least three major arguments for Brazil’s interest in leading the troubled organisation. First, Brasilia’s strong traditional commitment to multilateralism, which has always featured prominently in the country’s foreign policy. This is also reflected in Brazil’s efforts to reform the United Nations and its aspiration to become a permanent member of the UN Security Council, a priority of Brazil’s external agenda. From Brazil’s multilateral perspective, the WTO represents a set of global norms and rules against unilateral impositions and unfair asymmetric free trade agreements with the north. An example of this was the WTO’s decision in 2009 to prohibit subsidies on US upland cotton, which in this case favoured Brazil. Second, under the Lula administration, Brazil became a leading global power inter alia through its active engagement at the WTO Doha round. In 2003, at the WTO Ministerial Conference in Cancun (Mexico), Brazil launched the G-20 group of countries with a common trade and agriculture agenda vis-à-vis the industrialised nations. As the largest global food producer, Brazil has a particular interest in lowering non-trade barriers for agricultural products. Therefore, it is not a coincidence that another Brazilian, José Graziano da Silva, is the head of the United Nations Food and Agriculture Organisation (FAO). Furthermore, Brazil has been one of the six key negotiators – together with Australia, the EU, India, Japan and the United States – of the Doha process. Among other obstacles, its demand that agriculture subsidies be eliminated as a common practice in the EU, Japan and the United States has contributed to the paralysis of the Doha round. Third, Brazil is part of the influential BRICS – Brazil, Russia, India, China and South Africa – group, which supported Roberto Azevêdo’s candidacy and could see its influence over the WTO agenda in the post-Lamy- period improved. Brazil has close links with its BRICS partner. China is Brazil’s main export market and investor; Russia is an important ally against US impositions; South Africa is its main economic partner in Africa; and trade exchanges with India are increasing rapidly. A common position of these five countries and an alliance with other partners from the old ‘South’ could make a difference and reactivate the stalled multilateral negotiations on trade liberalisation. Unlike other international organisations like the UN Security Council or the International Monetary Fund (IMF), the WTO emerged in the post-Cold War order and offers more space for non-traditional Western powers like Brazil, China, India or Russia. Nonetheless, beyond the need to reactivate the Doha round, the heterogeneous BRICS group has little in common. Roberto Azevêdo is committed to reform and reactivate a WTO which, according to the new Director General, ‘is not doing well’. Against the strong opposition of China, Brazil seeks to broaden the agenda of the organisation, including the capacity to solve currency disputes as a source of trade diversion effects. But beyond future plans, the main challenge of Mr Azevêdo will be how to inject new dynamism into the stalled Doha round. In addition to the discouraging financial crisis and creeping growth rates worldwide, even in China and India, Brazil’s protectionism and isolation from FTA deals are also an obstacle that needs to be overcome. The ninth WTO Ministerial Conference, scheduled for December 2013 in Bali, will be the first real test-case for the new Brazilian leadership.
... the main challenge of Mr Azevêdo will be how to inject new dynamism into the stalled Doha round


Ambassador Roberto Azevêdo of Brazil took the helm of the WTO on 1 September 2013 as the sixth Director-General