Monday, October 3, 2011

Don't turn Brazil into a corporate playground

Children are protected from danger by their parents. The UN has recognised a principle called the responsibility to protect. So what is wrong with protectionism?

It is by shielding vulnerable sectors of the economy from competition that countries develop. This method has been used extensively in Europe and North America in the past; yet the rhetoric from our modern leaders indicates it is sinful for governments to nurture infant industries and prevent them being submerged by global corporations.

Brazil’s president Dilma Rousseff is expected in Brussels this week for two “summits”: one with the EU’s political representatives; the other with its business elite. More than likely, both events will hear pleas for “protectionist” urges to be restrained.

Inevitably, the objective of introducing a free trade agreement between the EU and Mercosur – the common market banding together Brazil, Argentina, Uruguay and Paraguay – will be a dominant theme at these meetings. Talks about framing such an accord have been conducted – with interruptions – since 1995 and, despite occasional predictions that a deal is on the horizon, none appears imminent. For a start, the enthusiasm for an agreement expressed by the European Commission is not shared by governments in France, Ireland and some other EU countries worried about pitting their beef industries against increased imports from South America.

Rather than taking on the meat industry in this continent, Karel de Gucht, the EU’s trade commissioner, has blamed Argentina for the deadlock. Speaking in April, he described the Buenos Aires government as the “great obstacle” towards reaching an agreement. “Argentina’s protectionism is creating problems and they are making our exporters nervous, especially in the automotive industry,” he said.

Bid to privatise water

If several of the Union’s own leaders are hostile to these trade talks, then who is pushing for them to succeed? In 2004, the European Services Forum (ESF) told Pascal Lamy, then the Union’s trade chief, that Mercosur countries must be willing to open their economies more to foreign firms. The ESF gave a list of the sectors it wanted liberalised: financial services, telecommunications, maritime transport, computer technology and “environmental services”. Almost certainly, environmental services was code for water, as one of the ESF’s members Veolia is eyeing private water contracts throughout the world. Water privatisation has proven catastrophic in Latin America. In the mid-1990s, the World Bank gave Bolivia a loan on the condition it would sell off public water utilities in its main cities. The result was that the poor were unable to afford clean water. By 2005, the cost of having proper water and sanitation in a La Paz household came to $450; to fork out that amount a worker on the minimum wage would have to put aside his or her entire pay for a nine month period.

But, of course, the realities of life in impoverished barrios will not be exercising the minds of the executive types in Brussels’ Palais d’Egmont, where the EU-Brazil business summit is taking place. The association of European chambers of commerce (Eurochambres) has a leading role in this jamboree. Almost a year ago, its secretary-general Arnaldo Abruzzini gave a grim warning about the consequences of the talks with Mercosur failing: “If we don’t reach agreement, China will overtake the EU [in its business with South America].”

Ah yes, the spectre of Red China. Ignore, please, the obligatory references to “shared values” like human rights and democracy when Rousseff meets EU bigwigs. The real agenda here is beating the Chinese.

Lust for resources

Energy is of critical importance in this race. The business summit will be taking stock of what has happened since the European Commission recommended forming a “strategic partnership” with Brazil in 2007. The Commission’s paper stated that Brazil has “huge natural resources” and that while it’s already a “major investment hub” for European companies, it will “offer major additional openings”. Biofuels were identified as an area where Brazil and Europe can cooperate more closely, given that the Commission is determined to press ahead with increasing the use of food crops to power cars. Findings by the Commission’s own in-house scientists that biofuels are not a solution to climate change have been glossed over. Instead, the Union’s most senior officials are more eager to please Repsol, the Spanish energy firm that is active in the Mercosur-EU Business Forum, one of the participants in this week’s summit.

Luiz InĂ¡cio Lula da Silva made some appalling decisions as Brazil’s president. Last year, he promised the French arms industry $6 billion in immediate contracts, money that should have been used to combat poverty. Yet he should be praised for overruling a patent on efavirenz, an AIDS treatment drug, in 2007, to ensure that affordable generic versions of the medicine would be provided to those who needed them.

If the EU has its way, Brazil would be restricted from putting public health before the commercial interests of pharmaceutical giants in the future. The Commission wants strict rules on intellectual property included in a free trade agreement so that generic medicines won’t be as readily available.

The agreement coveted by the EU is often compared to the Free Trade Area of the Americas that the US wanted to introduce. Luckily, that initiative was killed off six years ago because it encountered massive public opposition. The challenge is to encourage the same level of opposition to an equally ruinous EU-Mercosur accord. Corporations should not be granted planning permission to turn South America into their private playground.

●First published by New Europe, 3 October 2011

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