Webdiary’s trade expert Brain Bahnisch with the latest world trade news. His previous pieces include The U.S. Free Trade Agreement – always a silly idea, now a deadly trap for Australia andLatham’s conditions for FTA support: the facts behind the politics
News has just come through that Brazil has won a case against the EU in the World Trade Organisation (WTO) which will prevent the EU from exporting 2 million tonnes of subsidised sugar, while Brazil gets a 10% increase in their sugar exports.
Australia and Thailand joined with Brazil in the action, but apparently only Brazil gets the spoils. This one is not all over. The EU will appeal and are likely to try to change their subsidy regime to make it WTO compliant.
Nevertheless, along with Brazil’s successful WTO case against the US on cotton a couple of months ago, this decision is important for the future of the multilateral trade regime. The EU are learning that in the long run their subsidy regimes will not endure. Largely through Brazil’s leadership in the Cancun WTO ministerial last September, most observers believe that there has been a significant change of rhetoric in the EU. Where the rhetoric goes reality tends to follow.
This raises the question as to whether we in Australia is applying our limited resources in our best long-term strategic interests.
Since January 2003, when president Lula came to power in Brazil, it has:
1. Created the G20 grouping with China, India and South Africa as leading members within the WTO. In Cancun they provided real opposition to the US/EU axis and appear to have forced a real longer-term change of attitude.
2. Now Brazil will be an automatic part of any “inner group” planning which is a standing feature of the WTO. The have effectively sidelined Australia and the Cairns group.
3. Brazil has stopped the US steam roller in the FTAA (free trade for the Americas) in Miami last October. Brazil now has joint chairmanship of the FTAA together with the US.
4. Brazil is working to revive Mercosur, an EU-type regional grouping of contiguous countries in South America
5. Brazil’s raised profile is part of a strategy to gain permanent membership of the UN Security Council in any rejigging of the UN.
No doubt they are also pursuing bilateral trade interests. They have shown that they can certainly walk and chew gum at the same time. They have a population of 184 million, a GDP of US$1.38 Trillion, ranking 10th in the world. Their per capita GDP is $7,600, still lowish but a clear 50% ahead of China.
In terms of Immanuel Wallerstein’s World Systems Theory Brazil is a semi-peripheral power, moving towards core power status in the broader capitalist system. We, on the other hand, are a semi-peripheral power, and by opening us up to increased domination by the US and its corporations through the FTA, Australia is moving further away from core power status.
Our latest initiative is to begin negotiations on a bilateral trade agreement with China, also, like Brazil, moving rapidly from the semi-periphery to the core. This too was our initiative, not theirs.
When will we ever learn?