Brazil: Post-Doha - early public reaction

UNCLAS SECTION 01 OF 02 BRASILIA 001048 SENSITIVE SIPDIS STATE PASS USTR FOR DUCKWORTH TREASURY FOR OASIA HOEK AND TRAN USDOC FOR 4332/ITA/MAC/WH/OLAC/ADRISCOLL E.0. 12958: N/A TAGS: ETRD ECON BR SUBJECT: Brazil: Post-Doha - early public reaction (SBU)1. SUMMARY: In the wake of the Round's mini-Minsterial's collapse, Brazilian analysts and industry generally praise GOB for the approach it took in the Round trying to ensure a result in Brazil's national interest, rather than maintaining consensus with its Mercosul partner Argentina or other members of the G-20 developing country group. Brazil's constructive work to find workable compromises in the group of seven countries is a good sign that Brazil is truly engaging as a leader, which potentially has important implications for Brazil's role on the world stage in trade as well as broader items on the international agenda. Publicly, FM Celso Amorim said, "President Lula told me, 'Celso, it was worth the effort we made.'" Amorim was gloomy regarding near-term prospects for reviving the Round: "Taking this up again will be for the next generation," he said. "I would be the one who would have bet most an agreement was possible. We failed, but if I were the expert, I would substitute the players to see if we could achieve an agreement... Change the team and try again" (Valor and Estado). Public statements by FM Celso Amorim and MRE Economics U/S Roberto Azevedo avoid direct criticism of the United States, though the press believes negotiators "insinuated" criticism of both the US and India. Septel will provide further analysis of implications post-Doha for economic engagement with Brazil. END SUMMARY (U) 2. Public statements by FM Celso Amorim and MRE Economic Affairs U/S Roberto Azevedo avoid direct criticism of the United States, though the press believes negotiators "insinuated" criticism of both the US and India with comments such as Amorim: ""Taking this up again will be for the next generation," he said. "I would be the one who would have bet most an agreement was possible. We failed, but if I were the expert, I would substitute the players to see if we could achieve an agreement... Change the team and try again." (quoted in both Valor and Estudo). Amorim characterized the collapse of talks as "lamentable" and "unbelievable" (most press sources). Regarding future prospects for closure, Amorim said, "who knows, as long as 2013" before a round would be concluded (Valor). He noted, "it is not going to be resolved in six months. If the political situation today is difficult for negotiating, later there will be elections in India, in Brazil..." (Valor). U/S Azevedo (who will be the new Brazilian WTO Ambassador) said, "A decision to take up negotiations again is not in our hands, it is in others' who need a mandate to come back to the table." (Valor). Amorim added, "Let us hope to God it does not take another 9/11" to unlock progress on the Round (Globo, Jornal do Brasil). (U). 3. Asked about Brazil's interest in putting more effort into bilateral trade negotiations (such as the EU-Mercosul FTA or the FTAA),Amorim said, "We always said Doha was the priority. But we can not get hung up in something that does not give results...if there is nothing else, we'll go forward" with other negotiations, noting bilateral agreements are less advantageous for Brazil than a multilateral agreement (Valor). He stated, "It's clear we are interested in proceeding with negotiations with the EU" but that FTAA negotiations would be more difficult because Washington "demands things we can not accept" while EU negotiations are "more malleable" (Gazetta). Amorim reportedly stated the Doha collapse had negative implications for other global negotiations such as climate change. (U). 4. Globo and Estado ran articles pinning the blame, in their view, on the United States (both papers) and India (Globo) for not making an "extra effort" to conclude the Round. Globo printed a sidebar analysis identifying the "losers" of the collapse as (Globo's editorial comments noted in paratheses) Brazil (lost the chance for more agricultural market access; runs the risk of losing more than it gets in potential regional agreements like EU-Mercosul- particularly on industrial products, services, investment, government procurement and social/labor/environment issues),the EU (it is well integrated within Europe and needs new markets, has internal fissures on domestic supports and agricultural barriers), and African countries (with high world food prices, poor countries will continue to be unable to produce and export more). Globo's perceived "winners" in the collapse are India (is still free to adopt safeguards and protect agriculture sector and will look for more advantages, especially on services, in bilateral negotiations), Argentina (does not speak the same language as Brazil when it comes to industrial tariffs),the United States (while they need market opening, they have nothing to offer. They presented the minimum on domestic subsidies and have the advantage in getting everything they want in bilateral agreements),and China (paid a very high price to join WTO and knew they would have to give more in the round. Like India, they have an important role in the G20, but will try for advantages in bilateral agreements. The Chinese were negotiating an BRASILIA 00001048 002 OF 002 agreement with the US before the round was unleashed). 5.(U) In general, while lamenting the collapse of the Round, industry and think-tank sources publicly praised the Brazilian government's efforts and approach in the negotiations. The Federation of Agricultural Producers (CNA) commented "the agreement was fragile, little ambitious, full of exceptions, had significant gains" for Brazil. "After all the effort, it has substance. It's frustrating," commented Andre Nassar, the ex-head of the influential think tank Trade and International Negotiations Studies Institute (Icone) financed by agricultural interests. "We lost an important platform for the future," commented columnist and ex-Agriculture Minister Roberto Rodrigues. Nassar said "I can not fault the Americans for being offensive" and praised the Brasilian strategy as on the side of emerging exporting countries and distancing itself from India and Argentina: "All Itamaraty's choices were for an agreement." On the NAMA side, Marco Marconini, the director for international relations at FIESP (the largest member industry federation with the umbrella industry federation CNI) , noted that intense collaboration between the government and the private sector had yielded an "equilibrium" between Brazil's agricultural and industrial interests that will be hard to repeat and that "there is always a cost to lowering tariffs, but the controlled opening is good for our country, because it strengthens the economy." Marconini acknowledged that FM Amorim "did everything possible" to save the Round. Soraya Rosar, the international negotiations manager at CNI confirmed that, while the compromise was not ambitious, it "still was an advance in relation to what we have today in the WTO." The President of the National Association of Auto Manufacturers (Anfavea),Jackson Schneider, expressed satisfaction with the government: "The whole time, it had a position that solidly respected industry's limits." Industry analysts overall agree that there is no likelihood of any agreement now in the near term. (SBU) 6. COMMENT: This report provides a broad overview of early reaction in the press to the trade negotiations collapse. Post believes that Brazil's willingness to step beyond messages of solidarity with Mercosul and G20 partners to focus on its own national economic interests represents an important step forward for the country as it moves to takes its place as an engaged regional and international player. At the same time, the GOB will be thinking now about how to pursue its trade objectives in the coming months. In the coming days, mission Brazil will be engaging government and private sector interlocutors further on their views. Septel will provide further analysis of implications and potential for deeper engagement on economic and other issues for Brazil. END COMMENT SOBEL