Brazil WTO hopeful brushes off protectionist complaints

BRASILIA Thu May 2, 2013 6:47am EDT

Roberto Azevedo, Brazil's permanent representative to the World Trade Organization (WTO), speaks during an interview with Reuters in London March 14, 2013. REUTERS/Luke MacGregor

Roberto Azevedo, Brazil's permanent representative to the World Trade Organization (WTO), speaks during an interview with Reuters in London March 14, 2013.

Credit: Reuters/Luke MacGregor

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BRASILIA (Reuters) - Brazil's candidate to head the World Trade Organization brushed off criticism from rich nations that his country is growing more protectionist, saying he will be a neutral negotiator of global trade frictions if he gets the job this month.

Roberto Azevedo, a diplomat who has represented Brazil at the WTO for years, is running against Mexico's Herminio Blanco, a key player in the creation of the North American Free Trade Agreement (NAFTA), to become the first Latin American to lead the organization which sets the rule for global trade.

The winner will emerge in May and will face a huge challenge to restore confidence in the WTO's ability to negotiate a global trade deal.

Although both men come from Latin America, they represent nations with very different stances on free trade. Mexico advocates more aggressive liberalization while Brazil favors a gradual approach to bringing down trade barriers and a big role for the state in regulating commerce.

The United States, Japan, China, South Korea and other countries have complained that Brazil's move to raise tariffs on hundreds of imported goods to protect its local industry breach international trade rules. Brazil has said those measures are allowed under WTO rules.

In a document circulated at the WTO in mid-April, the European Union, Japan and the United States said Brazil has adopted measures to raise local-content requirements that "discriminate" against imported goods ranging from cars to cellphones and even fertilizers.

"I, as candidate and as director of the WTO will not be representing Brazil," Azevedo told Reuters in a phone interview on Tuesday.

"I made it to the final round in the election with those complaints on the table, and that doesn't change things. It means there is an understanding between WTO members that the candidate must be independent from his country and be evaluated according to his skills."

Asked if he considered Brazil was protectionist, he declined to comment.

While Azevedo is respected in diplomatic circles for his consensus building abilities he has come under fire for his efforts to get the WTO to discuss the impact of currency movements on global trade.

Blanco was Mexico's negotiator of the mid-1990s NAFTA treaty with the United States and Canada and a consultant in other free trade deals. In recent decades, Mexico has embraced free trade with a dozen such pacts encompassing 44 countries, its trade ministry says.

That would seem to make him a shoo-in to head the WTO, whose mandate is not just to supervise world trade but to work to liberalize global trade flows.

However, his proximity to free-trade deals reached outside the WTO could be a handicap in the final round of the race, particularly among the developing world weary of global trade policy dominance by wealthy nations like the United States.

Mexico's close links to U.S.-styled free trade policies makes Azevedo a more appealing choice for developing nations, said Kevin Gallagher, an international relations professor at Boston University.

"Most developing countries are at a stage of trade liberalization closer to that of Brazil than of Mexico," Gallagher said. "I think more developing countries will trust Brazil than Mexico."

SKILLED DIPLOMAT WANTED

Diplomatic skills and influence to revive global trade talks will have a bigger weight in the next selection round than the nationality of the candidate, some experts say.

"The characteristics of the nation that the person comes from aren't particularly important, what is more important is whether the individual has the power and the influence to get countries to liberalize," said Andrew Rose, an international business professor with the Haas School of Business at the University of California at Berkeley.

"The head of the WTO is not a particularly visible position, which is really sad because the WTO should be a much more effective and powerful institutions than it is."

The WTO's credibility suffered a serious blow in 2011 when its member recognized that the 10-year old Doha Round of trade talks - meant to culminate in a bold new trade deal - was, if not dead, at least at an impasse.

Both Azevedo and Blanco said the revival of Doha is vital for global trade to take off.

"We need to sit down at the table with a more open mentality and constructive spirit and more innovative vision about the issues we have at hand. That will only happen if we have the political will to overcome the impasse," Azevedo said.

Blanco has said key priorities include the elimination of subsidies for agricultural exports that hurt smaller countries, lowering tariffs on industrial products and introducing new rules on the way trade disputes are solved.

Since the onset of the global financial crisis of 2008 world trade has suffered greatly, growing a meager 2 percent last year, its smallest annual rise since records began in 1981 and the second weakest figure on record after 2009, when trade shrank. The WTO even slashed its 2013 trade growth forecast to 3.3 percent from 4.5 percent and warned of a protectionist threat.

Recession-hit Europe and a slow-moving United States are scrambling to bolster their exports via new regional trade deals that some experts say may undermine the relevance of the WTO.

"These plurilateral, bilateral and multilateral negotiations have always existed. The problem is that multilateral talks have not evolved," said Azevedo. "We have a system of rules that reflects the business reality of 30 years ago, which means that what should be the engine of global commerce has stopped."

(Editing by Anthony Boadle and W Simon)

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