His strategy wins nation clout on the global stage
BRASÍLIA Foreign Minister Celso Amorim, a cinema buff and former movie producer, likes to go over a script in his mind of Brazil’s future.
In it, Brazil shakes its postcolonial insecurity and takes the helm of South America to the United Nations, where it lands a full-time seat on an enlarged Security Council, along with its “kindred spirit,” India. Latin America’s largest country also helps rewrite rules about access to global agriculture markets. Finally, it shrinks poverty for its 184 million residents through stronger trade ties with Asia.
It is certainly a utopian vision – and one that many would shrug off as yet another overly rosy scenario for the historically crisis-wracked country. But these days, Amorim’s vision is more than just an imaginary script.
Since 2003, developing countries have come together to form a powerful new bloc, the Group of 20-plus or the Group of 21, to fight for their interests against wealthy nations at the World Trade Organization. Together, they scored major new global accords to end agricultural subsidies in August, about the same time that poor countries also won courtroom victories against subsidies for sugar in Europe and cotton in the United States.
Brazil has also signed billions of dollars’ worth of investment deals with China and other Asian countries, a move that officials hope will bring a stream of jobs and production to help offset the country’s lingering problems of poverty and development. And it has steered the South American trading bloc, Mercosur, toward freer trade within Latin America.
The soft-spoken Amorim, 62, with his salt-and-pepper beard, can claim a great deal of credit for these victories. He maneuvered himself into a position of influence during WTO talks this summer, taking on the role of a spokesman for the Group of 20-plus, whose members joined forces to strengthen their bargaining position in global trade. And, under President Luiz Inácio Lula da Silva’s stewardship, Amorim has helped set a cooperative tone that has big countries cozying up to Brazil.
“It’s been an exciting year,” Amorim said in a recent interview, sitting in front of an enormous world map in his office. “We accomplished many things largely due to Lula’s image and leadership.”
Da Silva is credited with tackling tough reforms while Brazil’s economy rebounded on booming commodity sales and a strengthening currency. Those forces are helping to bring unemployment, inflation and interest rates down.
Amorim’s star – and Brazil’s – has been rising along with that of da Silva, a former union leader and metal worker who initially worried investors with his leftist roots but won them over for his business-friendly stance.
Wall Street is also enamored of Finance Minister Antonio Palocci because of his fiscal prudence. But it is Amorim who has maneuvered skillfully to forge alliances with other countries that are turning Brazil into a trade force to be reckoned with.
“Amorim is a talented man, with extraordinary command of the issues, and a tough negotiator,” said Peter Hakim, president of Inter-American Dialogue, a research group based in Washington.
“Brazil has been extremely effective at shaping the trade agenda and giving leadership” to the Group of 20-plus, Hakim added.
Things were not always so successful for Amorim, an amiable, self-made man. In the 1960s, he was swept up in Rio’s heady student movement at the same time that he began his lifelong love of film. He saw a role in his country’s government as the ideal way to enact change.
Stories of racism, violence and poverty in his favorite films of that era, like “Barren Lives” and “The Grapes of Wrath,” inspired him at a time when social movements like one for land reform also sparked his streak of activism. He joined the External Relations Ministry in 1965, but his activities were initially confined to paper-pushing and postgraduate study at the London School of Economics, where his thesis focused on social change in Brazil. Amorim’s first ministerial postings coincided with a new 20-year military dictatorship.
Under a more relaxed but still military regime in 1979, Amorim joined his love of film with civil service in a role heading up the Brazilian Film Corp., a government-run entity.
But driven by a desire to reveal the truth, Amorim said, he approved financing for a film on torture in the early years of Brazil’s military dictatorship, a move that ultimately cost him that post.
After languishing in what he calls a “period of obscurity,” he was ultimately able to shift within government to dealing with social issues. Over time, his dossier widened to include issues ranging from tobacco control, labor reform, sustainable development, disarmament and peace. His big break came in 1993, when a boss’s illness created an opening for him as External Relations Minister. There, Amorim cut his teeth as Brazil’s global representative.
Amorim is most proud of his recent achievements: helping to create Mercosur, the agricultural victory this year for poor nations at the WTO, and helping poorer countries win the right to buy cheaper life-saving medicines without violating patents.
He has pushed a number of issues until they made their way into the public eye, where global sympathy was likely. And he has ruffled feathers for his hard-line tactics; critics accuse him of empire building.
Hakim, the president of Inter-American Dialogue, added: “Amorim has sometimes pushed Brazil’s aspirations too far. He’s frank, but can sometimes be abrasive.”
But that style ultimately clinched the WTO deal, Amorim said.
“The G20-plus changed the dynamic,” Amorim said. “We were firm, honest and decisive and had real leaders. Together we changed things.”
The ministry cited some estimates that said that successful implementation of those new rules could lift 500 million people out of poverty in poorer nations, and add $200 billion to developing economies.
Brokering such deals is not easy. Recently, talks about a U.S.-driven hemisphere-wide free trade deal, known as Free Trade of the Americas, have stalled, largely on issues over agricultural subsidies and intellectual property. So have efforts for a similar deal with Europe. Now the focus is on enlarging Mercosur, first with Andean and Central American nations, and clinching trade deals with India and South Africa.
But forging stronger ties with South Africa and India, with which Brazil formed the G-3 grouping last year, may be the apex of Amorim’s career. He points to a three-way century-old chair in his office, originally meant for courting couples and their chaperones, where foreign ministers from the three nations first came together in 2003.
That new alliance is already exploring ways to harmonize efforts in their quest for more prosperity and peace. As the largest democracies in their regions, the three nations hold sway in global negotiations, Amorim said, and could be a stepping stone to more trade between those regions from which to expand globally.
“We have affinity and influence,” he said.
Despite these achievements, Brazil is still navigating its way through painful adjustments. A budding economic recovery is still unfolding far too slowly for the ranks of the unemployed. The jobless rate has fallen from nearly 13 percent a year earlier – but at 10.5 percent, it is still achingly high. For the ranks of the impoverished still scrabbling for a living in Brazil’s honeycomb of shanty towns, economic change is not a tangible reality.
Taxes and regulations continue to stifle investment and economic growth in Brazil, the world’s fifth-largest country when measured by size and population.
“Further steps appear to be required to accelerate and ensure the sustainability of growth,” the World Bank said in a report issued in November.
Yet Brazil’s economy is unmistakably stirring after a deep sleep.
Growth reached 6.1 percent in the third quarter from the year earlier. Some analysts have raised their growth estimates for the year to over 4 percent from 3.5 percent earlier. In 2003, the economy shrank by 0.2 percent. Exports this year have also started to boom, and the country’s November trade surplus was $2.08 billion. Tax receipts have been rising steadily throughout the year, allowing the government to whittle down the national debt at a slightly quicker pace.
The decline in unemployment has helped fuel household purchases of big-ticket items like appliances and autos, which jumped 20 percent in September from a year earlier. New cellphone subscribers in October shot up 42 percent from October 2003, while retail sales in August rose for the ninth straight month. The economy is expected to grow at a better-than-5.3 percent clip this year, the fastest pace since 1994, according to government projections, and inflation has stabilized at around 7 percent.
In a gauge of investor optimism, Brazil’s stock market posted its biggest monthly gain in November.
The rebound in Brazil is being fueled largely by the global economic recovery, which lifted Latin American performance across the board. But the government also used the favorable trade winds from booming commodity prices to pare state costs like pensions and shutter ministries as part of market-friendly reform efforts many of its neighbors eschew today.
The upshot? In November the International Monetary Fund assessed the country’s performance as “very good.”
One of the most profitable strategies of da Silva and Amorim to enhance growth has been their careful cultivation of ties with China. Trade between the countries reached about $8 billion last year, propelling China to rank as Brazil’s third-largest trade partner after the United States and Argentina.
China has gone on a veritable spending spree in Latin America, buying up vast quantities of raw materials and shipping finished products back to the region for sale. And da Silva has rolled out the red carpet.
“Annual trade with China could double to $20 billion a year,” Amorim said. “Brazil is becoming more competitive, not just for prestige, but for practical reasons.”
Amorim’s skills could come in handy if Brazil, like Chile, pursues free trade with China later.
“There’s a global shortage of commodities and Mercosur has them,” said John Price, president of InfoAmericas, a market intelligence firm in Miami. “If Brazil is smart, it will realize China needs it more than Brazil needs China.”
Source: Truth About Trade & Technology