São Paulo – Mega trading blocs are developing and will determine the rules of international trade in the next few years. Brazil needs to take part in these discussions but for now is on the outside looking in, said sociologist Demétrio Magnoli in a lecture held at the Arab Brazilian Chamber of Commerce in São Paulo on Tuesday (9) evening.
Magnoli pointed out that two mega blocs are being created: one between the United States and the European Union and the other between the United States and the Pacific countries (known as Trans-Pacific Partnership).
At the same time, another bloc, the Pacific Alliance, includes Latin American countries bordering the Pacific Ocean: Chile, Colombia, Mexico and Peru. Magnoli argued for Brazil to take part in meetings covering topics such as investment protection, tax rules and discussion on production segments with the Pacific Alliance so it can take part in the development of these rules and, thus, insert itself in the supply chain that could arise between the Pacific Alliance and Trans-Pacific Partnership.
“On the one hand, (the Latin American countries alliance) is an area of deep economic integration, of integrated financial markets, of investment attraction. It’s a springboard for the integration with mega blocs that are being established. Our challenge is to connect ourselves to the Pacific Alliance and speed up bilateral agreements. These blocs will establish new trade rules in the world. Brazil needs to take part in this game, otherwise it will be submitted to rules it didn’t take part in developing”, he said.
Magnoli pointed out, however, that Brazil has a difficult path ahead. He said that the suspension of president Dilma Rousseff and her replacement by interim president Michel Temer has changed the international policies of the Ministry of Foreign Relations, now focused on bilateral agreements. However, the moment for the development and signing of bilateral agreements has passed.
“Europe is in a crisis and now has to handle Brexit (the exit of the United Kingdom from the European Union). In the United States, the two presidential candidates have been defending protectionist policies. The large opportunity windows have closed. Foreign minister José Serra has shown plans to move towards agreements. One could be developed with Mexico, which is open to this, and another one with the Arab countries”, he said, underscoring, however, the need to take part in larger alliances.
Magnoli added also that the integration of international blocs is a way to resume growth. Developing countries, such as Turkey, Russia and Latin American face growth problems similar to those faced by Brazil, due, in part, to the slowdown of the Chinese economy. Besides this scenario, Brazil also faces a political crisis.
According to Magnoli, the growth cycle and high commodities prices seen in this century’s first decade won’t happen again. It only occurred because of a combination of factors including the size of the Chinese population, China’s low production costs and high international liquidity. This cycle has ended and won’t happen again because there aren’t countries out there with the same conditions provided by China.
Around 70 people watched the lecture, which is part of the Lecture Cycle organized by the Arab Chamber. Among those that attended were the organization’s president, Marcelo Sallum, and vice-president of Management, Adel Auada.
*Translated by Sérgio Kakitani
