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Canada has buried the FTAA, charges Brazilian minister

by Mario Osava

Rio de Janeiro, 8 Feb 2001 (IPS) --  The Canada-Brazil trade and economic relations took a sharp hit Thursday, following the Canadian announcement of a ban on beef imports from Brazil on the ground of contamination of the beef by from mad cow disease - with effects far beyond the meagre $5 million of these Canadian imports.

The Brazilian Congress shelved all trade agreements with Canada that are pending Parliamentary approval, while the public reacted angrily by boycotting Canadian products in restaurants, and farm inputs like fertilizers, while there were calls for Brazil to boycott the forthcoming summit meeting in Quebec for the negotiations for a Free Trade Area of the Americas (FTAA).

Canada has “buried” the Free Trade Area of the Americas (FTAA) by spreading fears that Brazilian beef could be contaminated with ‘mad cow’ disease, Brazilian Agriculture Minister Marcus Pratini de Moraes said Thursday.

In Geneva, the Brazilian Permanent Representative to the WTO, Amb Celso Amorim served notice that Brazil will raise this issue at the General Council and other WTO bodies. But a combative Canadian Ambassador, Sergio Marchi, promised that Canada would be there (and respond) at every such meeting.

There is no justification for the ban on imports of Brazilian beef adopted by Canada last Friday, supposedly due to the fear that ‘mad cow’ disease or Bovine Spongiform Encephalopathy (BSE) could be present in Brazil, the Brazilian Minister Pratini de Moraes said in an interview with Globo, Brazil’s leading TV network.

The measure responds to “other interests” and not to the purported health motives, said Pratini, who suggested that it was a political decision taken in reprisal for the growth of Brazil’s aeronautics company Embraer in the world market for medium-sized planes, a market which was previously dominated by the Canadian firm Bombardier.

The Brazilian public reacted by boycotting Canadian products in restaurants, and farm products like fertilisers, while Congress shelved the trade agreements that have been signed by the two governments and are only awaiting parliamentary approval.

The secretary of the Inter-ministerial Commission on Foreign Trade, Roberto Giannetti da Fonseca, said Brazil could turn to the International Court of Justice at The Hague to seek compensation for the losses caused by Ottawa’s decision, or file a complaint with the World Trade Organisation (WTO).

Brazil will demand that the WTO study “the responsibility of sanitary and phytosanitary authorities for declarations concerning risk assessments with impact on private agents,” Brazil’s ambassador to the WTO, Celso Amorim, told the WTO’s General Council on Thursday, in a statement under any other business.

Amorim said his remarks referred to the “serious trade losses to Brazilian beef exports caused by precipitate and arbitrary declarations and decisions by Canada.”

But Marchi, responded that “we will meet in whatever WTO body that is triggered by Brazil. The recent action taken by Canada was neither precipitous nor arbitrary. Our action was taken based on health and safety reasons, which are entirely legitimate measures.”

The sense of indignation against the Canadian action continues to grow in Brazil as news reports underline the difficulties that this country’s exports will face, as suspicion surrounding Brazil’s beef spreads around the world.

Chile’s Ambassador to Brazil, Carlos Eduardo Mena, denied reports that Santiago was studying the possibility of suspending imports of Brazilian beef.

However, the Chilean Embassy’s trade attache Gonzalo Ibanez acknowledged that the situation in Brazil’s stock breeding sector was being examined, in order to calm consumer fears raised by Canada’s ban.  The conflict thus threatens to generate new difficulties for the processes of regional and continent-wide integration. Chile, like Bolivia, is an associate of the Southern Common Market (Mercosur), whose full members are Argentina, Brazil, Paraguay and Uruguay.

Messages of solidarity with Brazil from its Mercosur partners have been glaringly absent - perhaps a consequence of the prospect of winning market space lost by Brazil’s stockbreeders, some analysts say.

Argentine authorities said Mercosur should adopt a joint strategy in this case, as in other questions involving animal health regulations.

But Brazil sees it as a problem that goes far beyond health questions, and one that involves unequal relations of trade in which the industrialized North imposes its conditions on the developing South.

The WTO decided that Canada could apply trade sanctions to the tune of $1.4 billion over the next six years, after ruling that Brazilian government subsidies of Embraer’s aircraft exports had hurt Canada’s Bombardier.

Analysts say that ruling clearly demonstrated that the rules governing global trade favoured the North, because they were drawn up according to the standards agreed on by the Organisation for Economic Cooperation and Development, whose 30 members include all of the world’s industrialized nations.

Brazil is also facing a complaint brought by the United States against its patent law, which allows “compulsory licensing” for the local production of medicine, without the patent-holder’s consent, in cases of “national emergencies,” like the spread of AIDS.

The conflict with Canada will tend to strengthen sectors in Brazil opposed to the creation of a continent-wide FTAA. Politicians, as well as business leaders like rancher Pedro Camargo Neto, suggested that Brazil boycott the Apr. 20-22 Summit of the Americas in the Canadian city of Quebec.

It will also strengthen social movements that threaten to stage in Quebec, a repeat of Seattle - the US city where the massive protests staged by the “anti-globalization” movement foiled the WTO’s ministerial conference in December 1999.

Free trade, as defined by rich countries and transnational corporations, was flatly rejected by the Jan. 25-30 World Social Forum, which drew some 1,500 delegates of non-governmental organisations, social movements and leftist parties from throughout the world to Porto Alegre in southern Brazil.

The massive protests that have affected the WTO as well as the assemblies of the International Monetary Fund and World Bank have also taken aim at the FTAA.

Trade unionists participating in the World Social Forum at Port Alegre called for a massive mobilisation against the FTAA meeting of trade ministers scheduled for Apr. 6-7 in Buenos Aires, and especially against the Summit of the Americas in Quebec.

A number of social organisations that took part in the Porto Alegre gathering are linked together in a Continental Social Alliance against the FTAA, which has called on protesters to converge on Buenos Aires and Quebec.

In Quebec, besides the actions planned to oppose the liberalisation of trade and finances that, according to the Alliance, threatens the environment as well as human, labour, social and women’s rights, a “people’s summit” has been called to discuss alternative proposals for continent-wide integration.

The dispute between Brazil and Canada offers new arguments to those opposed to “lopsided” hemispheric integration, and a prolongation of the conflict could lead to failure, at least of the April meetings, analysts warn.

Brazilian legislators and ranchers complained that Ottawa had spread fears that beef from this South American country was infected with mad cow disease or Bovine Spongiform Encephalopathy (BSE), even though no case has ever been reported here.

Canada is “playing dirty” and making any negotiation impossible, said the president of the Stock breeding Development Fund, Pedro Camargo Neto, who proposed that Brazil boycott the Summit of the Americas in the Canadian city of Quebec next April.

Parliamentary Deputy Paulo Delgado, who first suggested that the bilateral agreements be shelved, said the Canadian government had spread “untruthful information” that was hurting Brazil’s exports worldwide, taking advantage of the alarm caused by mad cow disease in Europe.

The governments of Brazil and Canada have signed 11 agreements, which are pending ratification by Congress before they can go into effect, said Delgado, of the leftist opposition Workers’ Party.

Investment protection, technology transfer, satellite cooperation in telecommunications, education, agriculture and environmental protection are some of the areas covered by the pending accords.

Delgado said that while the delay in ratifying the agreements would have negative effects for Brazil, Canada stood to lose much more, because the accords mainly reflected that country’s interests, and Brasilia could replace the treaties with cooperation with other countries.

Brazil’s Foreign Ministry also raised its tone, putting aside its usually diplomatic language.

Canada has many investments and economic interests in Brazil, and enjoys a trade surplus with this country, stressed Brazil’s new Foreign Minister Celso Lafer, suggesting that Canada could suffer heavier losses in an open trade war than Brazil.

Trade relations require a “constructive attitude,” which we have not observed in the positions taken by Canada, added Lafer, who has been in his post for 10 days although he has long experience as a business leader and as Brasilia’s ambassador to the World Trade Organisation (WTO).

When Canada decided to adopt the ban on Brazilian beef imports last Friday, it sought to emphasise that the decision had nothing to do with the dispute over the market for medium-sized airplanes between Brazil’s Embraer aeronautics company and Canada’s Bombardier.

But in Brazil there are no doubts that the measure was taken in retaliation over that conflict.

The WTO ruled against subsidies that Brazil granted Embraer, and gave Canada the right to apply sanctions on Brazilian merchandise for up to $233 million a year over six years.

So far, however, Canadian authorities have merely threatened Brazilian companies, saying their exports could suffer the consequences of the airplane manufacturers dispute.

The measure against beef imports purportedly did not form part of the reprisals, but was justified as a preventive health-related measure, based on the “theoretical risk” of BSE contamination.

The indignation is growing in Brazil as the various sectors involved realise the extent of the global damage wrought by the ban, which sowed fears that BSE was present in Brazil.

For example, Brazilian beef has already been excluded from an international tender for exports to Iran.

The country’s beef exports, which totalled $800 million last year, could suffer a sharp fall this year, analysts warn.

Ottawa’s decision has also had an impact on the domestic market, with the prices fetched by stockbreeders falling due to the suspension of purchases by the meat industry, as it waits to see how the situation develops.

The Brazilian government is apparently split between declaring an open trade war or making efforts to negotiate, and has decided to wait for Canada’s response to a message from Foreign Minister Lafer demanding that the ban on beef imports be lifted.

Brazil, the world’s eighth largest economy, must react emphatically if it wants to hold its ground in the face of developed countries that “do not want it to grow,” said Luiz Hafers, president of the Brazilian Rural Society.

That association has called a rally for next Monday in Sao Paulo to protest Canada’s decision and “pressure the Brazilian government” to respond to that country’s “arrogance.”

Even if Brazil does not decide to retaliate on a formal level, the indignation should trigger reprisals by government officials, wrote Luis Nassif, a columnist on economic issues for the daily Folha de Sao Paulo.

Based on conversations he has had with officials, Nassif predicted that Canadian companies would start to run into difficulties in government procurements, and in obtaining loans from state banks, and permits and other necessary documents from regulatory bodies like the National Telecommunications Agency.

 


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