almost unpretentious about purchasing meat from Brazil; The Brazilian response, coming from the productive sector, brings to light the destructive potential of the trade war.
for the European network in Brazil. The movement was so strong that
The main loser? The consumer, always.
The proximity of the meeting of presidents of the , in Uruguay, in the first week of December attracted the fury of French rural producers. The diplomacy of the two blocs — and Mercosur — works to guide and vote for the approval of the biregional agreement.
Brazil has emphatically demonstrated its interest in rapprochement. On the European side, the most emphatic are the Germans, the Spanish and the Portuguese. In addition to France, Poland, Austria and Italy showed some level of resistance.
What is at stake is a tariff reduction front, with the definition of quotas in some cases, to intensify the flow of trade and services between the two regions.
The gains from trade have long been known in the literature. They are a real win-win. Countries can specialize in the production of goods and services in which they are most efficient, leading to an increase in overall productivity, income level and production and revealing comparative advantages.
Furthermore, international trade promotes competition and market contestation, which contributes to lower prices, better quality and production practices, and greater innovation. Access to larger markets allows companies to produce on a larger scale, potentially reducing per-unit costs, and consumers have access to a wider range of products and services from different countries.
It can facilitate the exchange of knowledge and technology between countries, promoting innovation and greater potential growth, in addition to encouraging foreign investment.
Although some jobs may be moved between sectors and regions, international trade creates job opportunities in export sectors and supporting industries. And it’s not just big companies that export.
Consumers, in turn, can obtain lower prices and greater purchasing power. And countries can ultimately benefit from promoting diplomatic ties and peace between nations through healthy economic interdependence.
In addition to theory, reality demonstrated this. After China’s entry into the WTO (World Trade Organization) in 2001, the world experienced years of robust growth with controlled inflation and low interest rates. The increase in income expanded the global middle class, a movement that was stronger in developing countries. Estimates point to growth of 50% in Latin America. What went wrong has been the subject of many studies, but the global financial crisis of 2008/2009 was a turning point, among other factors.
The concrete thing is that everything has changed since then and, in recent years, trade wars have prevailed, which tends to escalate next year. This is an important factor behind the French reaction. Commercial integration between Mercosur and the European Union became even more strategic, for both sides, after the United States election.
On the one hand, a region that produces excellent industrial automation, capable of boosting the modernization of the industrial park in South America. On the other hand, a region capable of leveraging the objectives of energy transition (and security) in Brazil. Brazil produces carbon credits at the lowest cost on the planet.
In between are food producers in France and a few other locations. They are accustomed to heavy subsidies and severe environmental regulation, with a land structure different from ours (less concentrated).
The acidity and offensive tone of the demonstrations in France reveal nothing more than the size of the struggle to maintain the status quo. They simply neglect the years of technological advances and health surveillance that we have had. In Brazil, initiatives in the private sector have ensured strict zero illegal deforestation policies with 100% traceability in their export business. And not just for Europe. The use of tracking satellites and artificial intelligence is already a reality in monitoring export farms.
But every crisis brings lessons. The first of these would be to ensure a consistent path to “accreditation” for our exporters, with consistent advances in zero illegal deforestation and improvements in the application and inspection of the Forest Code. And a lot of willingness to explain progress. Brazil has already established itself as a livestock powerhouse, we have one of the most modern agriculture on the planet, with many advances to come in the area of agroenergy.
Indeed, there is much room for progress. And the advantages of trade can bring strong incentives for environmental preservation commitments. If Europe is reliably engaged in zero illegal deforestation, then there is no better policy than deepening (healthy) commercial interdependence with countries in the Amazon region.
What we saw with the boycotts was a pedagogical demonstration of the effects of protectionism, the wrong way to go.
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