South Centre’s Visit to Brazil
A South Centre delegation went on a highly productive visit to South America in August 2013. The trip covered Brazil, Argentina and Uruguay. The South Centre team visited senior government officials and scholars in these countries, and co-organised seminars with national organisations. The team included Executive Director Martin Khor; Chief Economist Yılmaz Akyüz; Carlos Correa, Special Advisor on Trade and IP; Manuel Montes, Senior Advisor on Finance and Development; and Adriano José Timossi, Researcher. The following pages carry reports and photographs of the visit.
By Manuel Montes and Adriano José Timossi
In the first three weeks of August 2013, senior staff of the South Centre held a series of joint workshops and seminars with its partners in Latin America. The main context of these events was to debate the challenges posed by the continuing global economic crisis. The South Centre and its partners were conscious of the fact that international conditions are worsening with the end of the regime of low global interest rates, reversal of capital flows, continued weak economic growth in major markets, and widening issues in policy uncertainty.
Workshop: Global economic crisis, developing countries and policy responses
The Brazilian Development Bank (BNDES) hosted the joint South Centre-Multidisciplinary Institute for Development and Strategies (MINDS) workshop entitled “Global economic crisis, developing countries and policy responses” on 8 August 2013 in Rio de Janeiro. Mr. João Carlos Ferraz, Director of BNDES, Mr. Rogério Sobreira, Executive Director of MINDS, and Mr. Martin Khor, Executive Director of the South Centre, opened the workshop, attended by around 40 academics, policy analysts, and civil society participants. Mr. Ferraz warned that in the protracted global crisis, market fundamentalist policies, which had been discredited by the crisis itself, is resurfacing in many Latin American countries and that some pundits are warning that “the boys are back in town” (referring to the “Chicago boys” who had been associated with such policies and macroeconomic instability in the 1970s and 1980s in the region).
In session 1, in the keynote speech, Dr. Yilmaz Akyuz, Chief Economist of the South Centre, discussed the impact on developing countries of the crisis response policies by the advanced economies. He stressed that these policies will prevent a return to the conditions which had helped developed countries grow strongly in the 2000s and there is a need to withdraw from them. Developing countries cannot continue to rely on foreign demand and easy international credit conditions in the near future.
Ms. Yuefen Li, Head of the Debt and Development Finance Branch in UNCTAD, discussed the efforts of China to reduce its dependence on foreign demand and how this would not be an easy transition. The policy challenges facing developing countries and Brazil in maintaining macroeconomic stability and expanding long-term investment to sustain growth were discussed by Dr. Richard Kozul-Wright, Director of the Division on Globalization and Development Strategies of UNCTAD and Dr. David Kupfer, Advisor to the Presidency of BNDES. The need to protect and enhance the development policy space to respond properly to the global situation in the context of the limitations coming from the WTO and free trade regimes was the topic of Mr. Martin Khor’s presentation.
In the last session, Dr. Manuel F. Montes, Senior Advisor on Finance and Development of the South Centre, discussed the list of systemic reforms that would be needed to create a global enabling environment for development and Dr. Leonardo Burlamaqui, Program Officer at the Ford Foundation, explored the potential mutually-beneficial economic cooperation among developing countries, using the Brazil-China nexus as an example.
Meeting with the Economic Department, Ministry of Foreign Affairs of Brazil
The South Centre held a roundtable discussion with the Economic Department (DEC) headed by Ambassador Paulo Estivallet de Mesquita in the Ministry of Foreign Affairs premises in Brasilia on August 9. The roundtable was attended by 15-20 officials from the Ministry.
Dr. Yilmaz Akyuz made the keynote presentation, followed by Ambassador de Mesquita and Mr. Martin Khor. The impending negative global economic conditions for developing countries became a key topic of discussion.
In the interactive dialogue, a number of diplomats praised the work that the South Centre has been doing in Geneva. A former Brazilian delegate on intellectual property negotiations in the country’s Geneva Mission gave his own testimony of the role of the South Centre and of its important job of coordinating positions. The South Centre was more than a meeting place, not only for the exchange of views but also contributed technical resources to carry out background work crucial to substantiating developing positions. Dr. Akyuz said that in many ways the South Centre is continuing some of the work started by UNCTAD on issues of interest to developing countries.
There was an active debate on inter-regional trade and investment agreements, trade policy and industrial policy, crisis on emerging economies, and China and its role for global development (China can have many roles including as economic competitor, as a source of manufactured goods, as destination of commodity exports).
Meeting with Brazil’s Foreign Policy Advisor to the Presidency
The South Centre met Mr. Marco Aurélio Garcia, Chief-Advisor on International Affairs and his team, Mr. Aldo Faleiro (Minister) and Mr. Rodrigo Estrela de Carvalho (Advisor) at the Office of the President of the Republic, Palácio do Planalto on 9 August. Mr. Garcia, a well-known historian, also served former President Lula da Silva in a similar capacity. He is keen to see Brazil become a key global player in issues of development and the restructuring of North-South relations. Mr. Garcia highlighted the importance of the South Centre to address issues of relevance to developing countries.
In the past decade, Brazil has embraced the South-South Cooperation Agenda towards boosting integration among developing countries at sub-regional, regional and inter-regional levels with greatest examples including the Southern Common Market (MERCOSUR), Union of South American Nations (UNASUR), The Community of Latin American and Caribbean States (CELAC), Summit of South American-Arab Countries (ASPA), Africa-South America Summit (ASA), Forum of East Asia-Latin America Cooperation (FEALAC), India-Brazil-South Africa Forum (IBSA), Brazil-Russia-India-China-South Africa (BRICS) and the G20 also at the summit level.
On the global economy, Mr. Garcia also highlighted that the current scenario is marked by a highly uncertain international situation in various aspects and this is a consequence of the economic crisis and important geopolitical questions. He highlighted the fragmentation in global decision-making which requires greater efforts to analyze and to better understand the current context.
Mr. Martin Khor discussed some of the key issues behind the proposed inter-regional trade agreements being proposed by some powerful developed countries and their impacts on developing countries on key issues such as investment protection clauses, competitive neutrality, global value chains, state enterprises among others. Dr. Yilmaz Akyuz presented some key elements of the international economic scenario and warned that China will slow down in the coming years as the country will need to re-focus on domestic consumption. This will reduce commodity price increases in the international market affecting the trade balance of many countries strongly relying on exports to China. However, he stressed that the greatest risk for Brazil is now the increase on interest rates in the US. The reduction on foreign investments will result on deficits in the current account of Brazil and other developing countries. He called for more coordination among emerging economies.
IPEA-South Centre Roundtable Seminar on the Global Economic Crisis and Prospects for Emerging Countries
Prof. Marcelo Neri, Interim Minister of the Secretariat for Strategic Affairs of the Presidency of the Republic (SAE-PR) and President of the Institute for Applied Economic Research (IPEA), Brazil, Senator Cristóvam Buarque, former member of the Board of the South Centre and President of the Sub-Committee on Long-Term and Structural Themes of the Brazilian Economy, and Mr. Martin Khor welcomed the more than 60 participants in the IPEA auditorium on 12 August 2013 to the joint South Centre-IPEA seminar on the global economic crisis and prospects for emerging economies. In his welcoming remarks, Senator Buarque emphasized the importance of providing a high quality of life to the population in an environmentally sustainable way. This will require paying attention to income distribution and the provision of good wages and jobs.
In his keynote presentation, Dr. Yilmaz Akyuz highlighted the worsening global economic situation and the policy challenges that these conditions pose for middle income countries.
In the first session, moderated by Dr. Carlos Mussi, Director of the Economic Commission for Latin America and the Caribbean (ECLAC), Ambassador Carlos Márcio Cozendey, Secretary for International Affairs, Ministry of Finance of Brazil, in his presentation on “Global financial issues and reform: A perspective from Brazil”, discussed the need for urgent reforms in the international financial architecture. In the past, the international problem was how to prevent crises in the periphery from affecting the core of the global economy, but now the problem originates in the core and this is where the key reforms have to be undertaken. Dr. Renato Baumann, Director, Department on International Studies, Political and Economic Relations of IPEA, in presenting “IPEA’s perspective on the global economic and financial crisis,” noted that while the last two years did not cause too much trouble to emerging economies, the coming period will see higher capital costs and will result in more challenging conditions.
Mr. Martin Khor, in his presentation on “The global crisis and the future agenda of WTO and FTA’s,” emphasized that global trade and investment rules must be rebalanced in favor of developing countries who are being asked to take on international obligations not commensurate with their level of development. This is the only way that the multilateral economic system will continue to grow and all its participants will be able to benefit from it. Ambassador Paulo Estivallet de Mesquita, Director, Economic Department, Ministry of Foreign Affairs of Brazil, speaking on the “Impacts of the crisis on Brazil’s global and regional trade agenda,” discussed the challenges facing Brazil with its shrinking margin of maneuver in tariffs and in wrestling with agricultural protectionism from abroad.
In the afternoon panel, moderated by Mr. Jorge Chediek, UN Resident Coordinator, UNDP Resident Representative in Brazil, Ambassador André Aranha Corrêa do Lago, Director of the Department of Environment and Special Affairs, Ministry of External Relations of Brazil, talked about the challenges of advancing the sustainable development agenda, in which Brazil has a special interest, in a time of deteriorating global economic conditions. Dr. Manuel F. Montes discussed how the current global crisis is the result of unsafe global mechanisms that need to be addressed through systemic reforms. This makes developing countries the victims of policy spillovers from advanced economies.
Dr. Richard Kozul-Wright emphasized that in achieving the imperative of structural change, developing countries must undertake an integrated policy framework that enables the expansion of manufacturing activities and strengthens governance so that the state can both stimulate and discipline private sector activities. Dr. Esther Dweck, Chief Economic Advisor, Ministry of Planning, Budget and Management of Brazil, discussed the “Role of Public Investment in the Context of the Global Economic Crisis.” Public investment is critical because left to itself one could have a pattern of increased retail activities and concomitant imports without a corresponding increase in productive employment.
