Furthering Brazilian and Transatlantic Cooperation
The global economic crisis and its aftermath, coupled with Brazil's meteoric rise on the global stage, has fundamentally shifted dynamics in the Brazil-Transatlantic relationship. This shift provides an opportunity for both reassessing whether the status quo in economic, political, and trade arrangements are best serving the needs of the global community; and how new structures can deepen dialogue and better address emerging global priorities.
First, it is important to consider how deeply integrated Brazil and its neighbors to the north have become over the past decade. Trade with the US and the EU accounts for approximately 50 percent of Brazil's total trade. While multinational corporations in the US and Europe have long done business in Brazil, increasingly we are seeing Brazilian firms such as Vale, Odebrecht, and Gerdau expanding aggressively through the US and Europe. This trend is not just limited to mining, construction, and steel but increasingly the services sector. Private equity firms in both the US and Brazil are taking a closer look at opportunities in their respective countries, sometimes even collaborating as demonstrated by the recent acquisition by Brazil's 3G capital and Warren Buffett of H.J. Heinz Company.
Brazil and other emerging economies are also taking a more proactive role in global conversations at the G-20, United Nations, and World Trade Organization (WTO), among other global forums. Brazil was one of the leading emerging economies to commit $10 billion to the International Monetary Fund (IMF) as the institution looked to bolster its finances to help prevent future financial crises. Brazil and the United States have advanced numerous technical partnerships on topics of global concern such as biofuels, green technologies, climate change, and sustainable agriculture. The EU-Brazil Summit, held in Brasilia in January 2013, also produced a Joint Action Plan for 2012-14 with a number of synergistic commitments.
Despite the increasing level of global integration, the current governance structure of multilateral institutions does not reflect this new economic world where emerging economies play a critical role on the global stage, from global policy coordination to peacekeeping, financial stability, and trade. Brazil has long advocated for reform of institutions such as the UN and IMF that reflects the current reality of shared management of global risk. Supporting without qualification Brazil's candidacy for a seat on the UN Security Council would be an important step to recognizing Brazil's peaceful rise to a globally prominent role. A second recommendation would be for the transatlantic community to advance IMF reform, which includes re-working voting shares based on GDP versus the current (and more abstract) measurement of a country's degree of "openness." Stalled since 2011, IMF reform experienced a further setback on March 11 when the US Congress rejected a request by the Obama administration to approve a permanent increase in US funding to the IMF that would have paved the way to finalize reform and boost the voting power of emerging economies.
Another area of recommended cooperation would be to solicit Brazil's support in bridging longstanding differences between the North and South on trade liberalization (e.g. market access and agricultural trade) that has long stalled the conclusion of the Doha Round. Brazil has been advocating strongly for the candidacy of it's Ambassador to the WTO, Robert Azevedo, to succeed Pascal Lamy as Director-General of the organization. Consideration should be given to the strategic benefits of supporting Brazil's candidacy in the context of both concluding the Doha Round and educating industry stakeholders in Brazil on the broader benefits of trade liberalization, an especially sensitive topic in the aftermath of the global financial crisis.
Brazil's record of experience on energy security and climate change position it to be a strategic partner to the transatlantic community on a number of fronts. One would be the sustainable exploration, development, and exploration of Brazil's onshore and offshore oil and gas resources. The Brazilian government's plans to hold three oil and gas auctions this year highlights a strategic convergence of needs. Namely, the transatlantic community's need to diversify its energy supply coupled with Brazil's need to leverage investor capacity and technological resources to ensure that production and exploration is conducted safely and sustainably.
Lastly, as Brazil and other emerging powers are assuming a greater role in UN peacekeeping operations and poverty relief programs in countries such as Haiti and Mozambique, the transatlantic community could benefit from Brazil's extensive experience with both urban conflict and the success of its social welfare programs in reassessing traditional approaches to peacekeeping, anti-crime operations, and aid. Instituting a formal dialogue between Brazil and the transatlantic community to allow for annual consultations to exchange best practices for how similar UN interventions could be carried out could deepen the global community's ability to successfully safeguard crisis zones and reach poverty reduction goals.
Gabrielle Trebat serves as Director at McLarty Associates, where she works as a member of their Brasil and global practices. Prior to joining McLarty Associates in 2011, she served as deputy assistant secretary for business affairs and public liaison at the US Department of Treasury, where she oversaw outreach to the private sector, labor, and NGO communities.