Notícias
Financial Times (February 22, 2007)
Jonathan Wheatley, the FT’s Brazil correspondent, and Richard Lapper, the FT’s Latin America editor, recently spoke with Celso Amorim, Brazil’s Foreign Minister. Mr Wheatley also interviewed Dilma Rousseff, the President’s Chief of Staff, and Mr Lapper talked with Guido Mantega, Brazil’s Finance Minister.
FINANCIAL TIMES: What changes are taking place in relations in South America? Mercosur today seems much less cohesive that in the past and there seems to be a new axis developing from Argentina through Brazil and Bolivia to Venezuela.
CELSO AMORIM: I don’t know how cohesive Mercosur was before. If relations are superficial it can give the impression you are cohesive, but as relations deepen some differences may appear. The kind of unhappiness now being shown by Uruguay first appeared during the previous administration in Brazil. Take the agreement with Mexico, in which in reality there was a kind of authority for each country to go its own way, which in practice was against the customs union. Of course Mexico is a member of Aladi, so in a way it may be easier in the long run to seek convergence. It’s certainly more difficult if any member seeks to have a free trade agreement with any major commercial power. It’s not a question of the US, it might be the US, the EU or China, but if a member state has an FTA with a major trading partner which departs from the TEC [Mercosur’s common external tariff] then of course there is a problem. Uruguay did this with Mexico at that time and it was a problem. So did we, but under the Aladi umbrella.So these kinds of difficulties have appeared before. Lula is the first to admit it, but this is not something that happened in this government, it has been happening for a long time. We are the first to admit that Mercosur hasn’t fulfilled its promise to the smaller economies. To put it simply, their exports to Brazil didn’t increase. Actually they decreased in the past eight years or so – very abruptly after the devaluation under [former Brazilian President] Fernando Henrique Cardoso [in 1999] and never picked up to their previous level.
FT: You recently mentioned a Uruguayan manufacturer of mineral water that was finding it difficult to export to Brazil...
MR AMORIM: In one of our first Mercosur ministerial summits, in 2003, the second actually, the question of asymmetry was put very strongly by them, and we did absolutely everything that was asked of us. But it was not enough for them to attract investment. Maybe for different reasons. One reason is technical barriers, bureaucratic barriers of different kinds. We’re not denying it, it may be true in some cases, sometimes for well-intentioned reasons I must say. But even allowing them some preferential treatment in terms of exceptions to the TEC, so that they can buy inputs at lower prices – that was not enough. In any economy you also have externalities, so somebody who wants to invest in Uruguay or in São Paulo must look at where they can import capital goods more cheaply. But there are other factors, too.
But it took time to reach the conclusion that this was not enough. So in my opinion it required some kind of affirmative action. This is not because we are or want to be a very generous partner, it’s not a matter of favours. It’s in the interests of Mercosur. Mercosur has given a new personality to the region that it didn’t have before, so this is in our interest. That’s why we are trying to interest our development bank, the BNDES, to reach agreements on investment. But all this is starting now. And we are acting on other fronts such as in the case of the mineral water, but it’s not only that.We are financing investment, joint ventures. Of course if a Brazilian company is involved that makes it easier but it doesn’t have to be a 100 per cent Brazilian investment.
So there is a much clearer consciousness on the part of the Brazilian government that we need to do more. It’s not enough that the president is an integrationist or that the foreign minister is, you have to have customs officers and police at the border who are integrationists too. They have to do their jobs with a different kind of mindset. All these instruments of protection were created at a different moment, not when Brazil was trying to aim at broader integration.
Recently we had the launch of the PAC [the government’s programme to accelerate economic growth] and as far as I can remember this is the first time that there has been a programme in Brazil with a list of criteria for selecting projects in infrastructure, where South American integration is mentioned as a factor. So this view, this consciousness that we have to somehow include the idea of integration in our internal policies is finally happening. It takes time and it is not easy. But for example, the bilateral commissions on trade are led by the trade ministers and have been very successful. So there is a change in mentality, not only by the foreign minister but by others too. More broadly, we are now making a contribution of $200m to the CAF development bank, so we are getting more and more involved in the integration process.
FT: Can you rule out that Uruguay might go its own way?
MR AMORIM: I can’t say that. It’s their choice of course. Every Brazilian would respect that. But you can’t have your cake and eat it. You can’t be part of Mercosur and at same time not be part of the customs union. It is one thing is to have exceptions for a transition period. Brazil has exceptions, we had them for a long time, I believe they are still there for pharmaceutical goods, which don’t pay the full TEC. Argentina has exceptions on capital goods, Uruguay and Paraguay have more. I’m not saying this is ideal. In reality the TEC is like virtue, it is its own reward, because to have a TEC you have to get rid of bureaucrats and have a real common market working.
FT: The Uruguayans might argue that if Mercosur can adapt to allow in Venezuela and Bolivia, shouldn’t it also adapt in favour of its original members?
MR AMORIM: In the case of Venezuela, speaking broadly, not product by product, Venezuela had agreements with Colombia for example, and some of these will involve zero tariffs, which is different from the TEC. That’s not a problem because we also have an agreement with the Andean countries. So a convergence is possible. The difficulty would be if Venezuela had an FTA with the US, the EU or Japan, as then it couldn’t change, it becomes an international obligation. If for example Bolivia needs a cost of living exception as it needs to buy something more cheaply – if it needs that as a transition, OK, but if they negotiate that with the EU it can’t change, ever.
I agree that Mercosur should adapt to improve conditions. When we made our agreement with the Andean countries – and for Brazil, South America is now more important that the US as an export market, and imports are increasing too – all the advantages or exceptions that we offered to Ecuador were automatically extended to Uruguay and Paraguay. So I don’t see these problems happening. Of course you have to take into account that Bolivia is much poorer than Uruguay. And we don’t have the money that the EU has to compensate everyone for the common agricultural policy and so on. We don’t have those funds. So we have to give exceptions here and there. But one thing is to do this as a transition, the other is for a country to be involved in negotiations that would make that immutable.
We don’t have the funds, but we do recognise the need to correct asymmetries and we have already spent $70m on projects in Uruguay and Paraguay, which is a form of compensation. I’m not saying it solves all the problems but it puts us in the right direction.
FT: Why is it so important for Venezuela and Bolivia to join Mercosur?
MR AMORIM: If you look at Mercosur from a purely commercial angle you won’t understandit, and it would probably not justify itself fully. When talks about Mercosur started, people said Why are you talking to Argentina, you should be talking to the US. Of course, now trade in Mercosur is very important, it has gone from $4bn to nearly $30bn, so it is not negligible. But you can’t look at it from that point of view alone. Also, the EU is not purely commercial, or it would never have gone beyond free trade, it would never have become a customs union.
Of course the two countries you mentioned, especially Venezuela, have huge energy resources. And in the case of Venezuela it gives us an opening to the Caribbean, which is very important geopolitically – not because we want political influence but because it is part of our trade routes.
Bolivia has the largest border with Brazil, so for us it is very important that things go well there. In recent years it has always been in crisis and though I’m not saying the crisis can be solved there is always a chance. The government represents a part of the population that has always been repressed. And in Bolivia we are in discussions on the border region, on the joint use of river resources that are important to us, plus the connection to the Pacific, so it is absolutely essential for Brazil that things are stable in Bolivia.
FT: Is open regionalism still there, driven by trade, or is the emphasis now more on resources?
MR AMORIM: I don’t disagree with that analysis [that resources are more important than trade]. There have been many changes and I quite agree that the emphasis on resources and interconnectivity is much greater now. But the purpose at the start of Mercosur was mainly political, to consolidate democracy. At the time we were in a new era of liberalism. As a negotiator, as I was at the time, I was seeing two countries aligning very quickly, Argentina and Brazil, and that’s what happened, and it was good. Maybe there has been a change of emphasis, but...
The world at large was going through unilateralism, the Uruguay round, maybe the perception was that this was the main thing, but I never thought it was the main thing, the main thing was political unity in the region. But of course trade is absolutely necessary. That’s why sometimes we disagree, we have discussions with Chávez and others, because they think they can belittle trade, and although I think trade is not the ultimate goal, it is an essential means.
FT: What is the main thing now?
MR AMORIM: Trade continues to be important. For Bolivia it will be much easier to get compensation in Mercosur for what they are losing in the US because the Andean trade preference act will not be renewed. People say, Aren’t you afraid Venezuela will become an autarchy? Well, it’s not to us as we exported $600m in 2003 and almost $3.6bn last year, so trade is there and is increasing at a rhythm not common in the world, except for China.It’s not an autarchy, it’s buying from us and not from the US or the EU, which is not our problem. People talk a lot about the state but 90 per cent of life in Venezuela is governed by private activities.
FT: Is there a new ideological alignment in the region led by Brazil, Venezuela and Bolivia? MR AMORIM: Did you hear Lula’s speech the other day? We are not interested in growth if it is not accompanied by democracy or social justice. If you call that ideology, fine. Ideology has become a dirty word. Nowadays it is only identified with the left. If ideology is having growth with democracy and social justice, I’m fine with that. I’m not denying that we have affinities with some people that may help, although in the area of social reform they may not have the same identical way of seeing the political process. I don’t need to go into details, you can see if you followed the elections in Brazil, how much Lula was attacked in the press and how he didn’t move one finger to prevent it.
But we have excellent relations with Colombia and Chile, where our investment is also growing. Chile is a very open economy, and Colombia has an agreement with the US. Sometimes people say Uribe is a conservative, but we have excellent relations. And Colombia was essential in the deal between Aladi and Mercosur that enables us to talk about the South American Community of Nations based on the reality of free trade. We now have a free trade area covering the whole of South America. And it enables us to talk about infrastructure, although these things may not be as advanced as we would like.
The only thing about free trade in South America is that it’s not multilateral. But we have free trade agreements between all the groups, so in practice all the groups are linked. One of the ideas is to have convergence and in practice this is already having results. And there have been a lot of advances in physical connectivity. We are starting in a very pragmatic way. The agreement with Venezuela for example is not the big gas pipeline for all of South America which may come one day and we think it should, but a very precise pipeline from Venezuela to north-eastern Brazil. And we have an agreement on exploration of oil and gas in Venezuela. This is separate from the agreement no a refinery in the northeast.
FT: Does building the refinery get you access to the Orinoco fields?
MR AMORIM: Yes, the refinery is linked to the oil fields and the pipeline is something different, but in a way everything combines in an energy agreement. Not only this, our trade with Venezuela is extraordinarily high, of all kinds. There are many foodstuffs, capital goods, machinery – it’s very varied.
We have agreements like this with Bolivia, with Chile, with Ecuador, with Colombia, and with Argentina. It’s hard to find somewhere we don’t have an agreement with. One of the most important projects put into operation was the interconnection between the Peruvian Pacific and the border with Brazil. This is very important for development. Last year for the first time the state of Acre exported more to Peru than to the east, even before the road is ready. The connection between the North Atlantic and the Pacific took place in the 19th century. We are a hundred years behind but we have to catch up.
The world of the 21st century is a world governed by big blocks. China is a block in itself, the EU became a block. But even a country as big as Brazil is not a block that can face these real giants, so integration of South America is important for Brazil but it’s even more vital for the other countries in South America as otherwise they won’t even be noticed. So of course somebody can come and reach a trade agreement with the small countries if they want to annoy us or create a problem for Mercosur.
FT: So are energy resources your big priority?
MR AMORIM: Certainly the most obvious single thing is resources and energy in particular, but I would not underestimate trade and I would not underestimate stability. Why did the EU incorporate Bulgaria or Rumania or the Czech republic, is it because they are big markets or because of stability in the region? If the region is unstable that will have a big impact on us.
We have to make the best of liberalisation and make sure it is happening more quickly and deeply here than in relation to the rest of the world. The first time the four countries were together was not to discuss their own integration but to coordinate policy for the Initiative of the Americas by president Bush senior.
Liberalisation is certainly a big priority in world trade and that is why we are so interested in finalising the WTO. And don’t get me wrong, we give big priority to that. There are nuances between the different countries and all kinds of investment are welcome. The participation of private investment is very important and the government is trying to invest in areas where the private sector is less interested. There is no attempt to get the Brazilian state involved in manufacturing, there is no going back in that respect. So there are nuances, this is not generalised. On the other hand there are areas where without the inducement of the state, nothing will happen. I mentioned infrastructure. In 200 years, nobody has decided to build a railway between Rio and Chile or Peru.
Brazil and even Argentina for that matter may have taken measures that are seen as protectionist, but I would hesitate because any simplified analysis in that direction might give the idea that we want to go back to the time of the big state company. This is not the case. We have CVRD growing as a big private company, Petrobras is influenced a lot by its private stock holders.
FT: Yet the companies that benefit from regional integration are primarily big companies in resources and construction.
MR AMORIM: But take AmBev, which produces beer. It is present in every country in South America except Suriname and Guiana. Textiles companies are investing in Peru to sell to the US. Of course it’s proportional and the big companies may be more involved, but I would need a detailed analysis of our exports.
FT: How much concern is there over the clear drive in Venezuela to go towards a more centralised, more executive-driven model with fewer checks and balances?
MR AMORIM: It’s certainly not our way, for many historic reasons. We follow Churchill’s model that democracy is flawed but is the best regime yet invented. And our model is certainly to have checks and balances and a free press, which I think we have proven.
Don’t ask me to be very specific. I can say we value freedom of the press and of criticism very much. We prefer it that way, for us, and we prefer others to follow the same route, but I can’t go into legal specifics. Whether we would make the same statements is something different. During the process of the referendum all the decisions were taken by the Venezuelan government and people, but whenever we can use our positive influence in situations like that, we do. Which doesn’t mean it’s always effective. And the Venezuelan opposition has made huge mistakes in the past.
FT: Is there concern at what might happen in Venezuela if the price of oil fell?
MR AMORIM: Even if that happens it won’t be immediate. President Chávez is aware that they can’t live only on oil revenues, they have to diversify their production and some of the things that they discuss with us to do with agriculture and industrial production, even some of their concerns about the timetable of Mercosur, show they are aware of this. I think he is concerned.
Things are not easy anywhere, and of course if we were to take the kind of line that other countries have taken in the past, of trying to influence the results of elections, that doesn’t work, in fact it backfires. Sowhat we can do is try to help in the dialogue in Venezuela between the government and the opposition. I talk a lot to Chávez but I also receive people from the Venezuelan opposition here. And if we can help in any other situation, like the one in Bolivia...
But all these things are very delicate. The principle is non-intervention, but we also follow the guideline of non-indifference. If we can help we try to help, in many situations in different degrees, and I don’t want to put too much value on this, but in Ecuador we were there, in Bolivia in previous situations also, but the conditions have to be there, sometimes you have to create confidence, and to do so involves not only political conditions but also economic and social conditions. It takes time.
FT: Has this approach enabled you to have influence in Venezuela?
MR AMORIM: You have to judge. Our objective is not to have influence, to make Venezuela part of the Brazilian sphere of influence, but if you mean to have dialogue... The meeting of the South American Community of Nations here was totally new. People pointed to disagreements and there were for sure, but the leaders of the South American countries had never talked so freely among themselves. And of course you only heard part of it, there was a retreat just for the presidents. This creates an atmosphere that is helpful not for intervention but for good work – to make the dialogue more fluid, and this atmosphere is something new. In the past whenever we held discussions it was under the eye of the north, at the summit of the Americas, but not among ourselves. And now we are meeting among ourselves.
FT: Has this been true of the Bolivian crisis?
MR AMORIM: If you had taken the attitude that many did in Brazil – and today I don’t think they would, but that they claimed they would take – then you would have had a history of radicalisation. You say words and you are stuck with them. We discussed, we reacted, we didn’t overreact, we defended our interests in a pragmatic away and also defended Bolivian interests. The potential for problems between Brazil and Bolivia is very big. We have a big border that was a dead border and is now a live border. We have gas pipelines, we have Brazilians in Bolivia and Bolivians in Brazil, we have resources – what we are trying to do is work on these things seeing them more as opportunities for cooperation than taking unilateral decisions that precipitate other unilateral decisions.