Lula 2.0 can be a game changer | The Financial Express

Lula 2.0 can be a game changer

Lula’s election to the Brazilian presidency will add political heft to other developing countries, particularly India, in their endeavour for a multilateral trading system that is inclusive, equitable and pro-development.

Lula 2.0 can be a game changer
It is to be hoped that during Lula’s second presidential stint, Brazil will rediscover its identity as a developing country. (IE)

After having won the presidential election in Brazil with a narrow margin, Luiz Inácio Lula da Silva, popularly known as Lula, is set to assume office on January 1, 2023. What does this mean for India, particularly concerning trade?

During his first stint as Brazil’s president in 2003-2010, Lula left an indelible imprint in voicing the aspirations and articulating the interests of developing countries. These years were marked by Brazil’s active engagement in seeking reforms in the UN, especially the Security Council. In his quest for a fair a just world, Lula had emphasised on the need to promote social equity and inclusive growth. An integral element of his engagement at the global stage was to build partnerships with other developing countries. One of the high points achieved by Lula in international cooperation was at the WTO. This needs recounting, as it continues to remain relevant in today’s world.

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The 2001 Doha Ministerial Declaration of the WTO had provided the broad mandate for the aim, scope, and direction of negotiations on agriculture. The initial years of the negotiations saw attempts by some developing countries to get the developed countries, particularly the European Union and the US, to eliminate some of their protectionist and trade-distorting practices in agriculture. Many developing countries, such as India, sought the retain the right to protect their farmers from import surges and low-priced subsidised imports. On the other hand, the developed countries and some developing countries, including Brazil, appeared keen to pry open the agriculture markets in developing countries.

Against this background, the US and the EU made a joint submission in August 2003, laying down their vision of the key elements of the negotiation on agriculture. This proposal accommodated the EU’s and US’s mutual interests, but ignored the concerns of developing countries. The joint proposal wouldn’t have resulted in any reduction in agriculture support by the EU and US; instead, would’ve required countries like India to lower customs tariffs, thereby facilitating imports of agriculture products.

Given the economic might and political clout of these developed members of the WTO, the joint proposal was at the verge of becoming the basis of future negotiations. A huge crisis was staring India and Brazil at the negotiating table. It is here that Brazil’s quest for a fair and equitable multilateral trading system came to the forefront. It proposed to India that the two countries join hands to counter the might of the EU and US.

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For Brazil, an export powerhouse in agricultural products, India, with millions of middle-class consumers, appeared an extremely lucrative market. On the other hand, India’s main objective in the agriculture negotiation was to protect its farmers from imports by retaining the right to impose high tariffs. In making its offer to join hands with India, Brazil effectively sacrificed some of its export interests in India and other developing countries. This was a sign of maturity and wisdom, commonly attributed to Celso Amorim, Brazil’s minister of foreign affairs under Lula. Arun Jaitley, India’s commerce minister, quickly grasped the strategic significance of joining hands with Brazil and provided it unstinted backing. Within a week, under the joint stewardship of these two countries, their nascent partnership quickly got transformed into an effective coalition of a large number of developing countries.

What did the coalition of developing countries achieve at the WTO? It became a key player in shaping the agenda of agriculture negotiations. It was successful in not only providing a counter-narrative to the US-EU joint proposal, but also in getting countries outside the coalition to support its vision of reforming the WTO Agreement on Agriculture. For five long years, it was this coalition, and not the EU-US combine, which held sway on agriculture issues at the negotiating table. It had successfully challenged the entrenched power structure at the WTO and prevented the US and the EU from rewriting the rules of the game in the mould of their narrow economic interest.

The coalition lost much of its steam after 2010, when Lula’s successor became too preoccupied with domestic matters. In more recent years, under president Jair Bolsonaro, Brazil appears to have abandoned its development-oriented approach on WTO issues and has aligned itself more with the positions advocated by the developed countries. This has weakened the collective voice of developing countries at the WTO.

It is to be hoped that during Lula’s second presidential stint, Brazil will rediscover its identity as a developing country and carry forward the legacy of working closely with other developing countries for achieving common objectives in WTO negotiations and other international trade issues. This will surely add political heft to other developing countries, particularly India, in their endeavour for a multilateral trading system that is inclusive, equitable and pro-development. It is in India’s interest to seize the initiative and extend the hand of cooperation with Brazil at different levels—political and diplomatic. At a time when developing countries find themselves buffeted by the developed countries on most issues at the WTO, the India-Brazil partnership can again be a game changer.

The author is an expert on international trade issues

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First published on: 03-11-2022 at 04:15 IST