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

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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