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INTERNATIONAL TRADE & WORLD AFFAIRS AFTER THE PANDEMIC FOR BRAZIL

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COVID-19 SERIES: INTERNATIONAL TRADE & WORLD AFFAIRS AFTER THE PANDEMIC FOR BRAZIL

MAY 8, 2020

AUTHOR Diego Ures1 and Mario Guarnieri2
CONTACT  diego.ures@sideraconsult.com and mario.guarnieri@sideraconsult.com
INTERNATIONAL TRADE & WORLD AFFAIRS AFTER THE PANDEMIC FOR BRAZIL

One of the main questions about the post-pandemic world is the future of international affairs and global commerce negotiations that had to be stopped. In a recent interview, Rubens Ricupero, a retired Brazilian diplomat, pointed out that, in what regards to the Mercosur agenda’s under discussion before COVID-19, in addition to all other major foreign policy issues that were being debated are, for now, suspended. As long as there is a quarantine in place, it is impossible to continue with pending negotiations and take new initiatives. Among the major challenges surrounding the virus and international relations during the pandemic, it is essential to highlight the universal aspect of the virus and the lack of synchronicity: China, for example, is already emerging from the epidemic, while some countries are yet to face the worst. The two points mentioned above justify, for now, the ongoing standoff in further talks, and resulting in the need to form a new post-COVID-19 agenda.

As pointed out by the Ambassador, it is interesting to mention a comparison of the effects of the current pandemic with previous calamities such as the Great Wars. At the end of World War II, the 1930s agenda, which was marked by the great depression, never returned. That happened because, in the post-war context, this became irrelevant, and the agenda fell by the wayside. At that time, a new agenda was formed: the reconstruction of countries, the establishment of a welfare state and the emergence of a new conflict, this time with the Soviet Union. The post-COVID-19 agenda will not be a continuation of what was previously discussed and the dominating force will be the rebuilding of the economy.

It is worth to mention that the destructive power of war is much greater than that of a pandemic. The material destruction observed in war times tends for the most part to result in profound changes to the political system. The First World War, for example, put an end to the existence of empires. On the other hand, a pandemic does not have such reach, having demonstrated to have the opposite effect, increasing the popularity of some politicians, such as that of the Prime Minister of Italy Giuseppe Conte, French President Emmanuel Macron and, the recently observed increase in popularity of the Chilean President Sebastián Piñera. Despite this global trend, the same does not appear to happen in Brazil, resulting in the great presence of criticism, from both national and international sources, illuminating Brazil’s lack of response to the pandemic.

Regarding the economic effects of the pandemic, the case of Brazil is contrary to most projections. The results of the trade balance do not show the impact of COVID-19, with a surprising increase in export volume, despite the fall in price. This is also interesting when looking at the fact that China, the main destination of Brazilian exports, has been quarantined the longest and has been suffering the effects of the coronavirus for a long time. According to forecasts from the World Trade Organization (WTO) and other organizations, Brazil should be already suffering from the adverse effects (in its exports) of COVID-19, demonstrating the considerable uncertainty about what will happen.

Another issue to take into consideration is the duration of the impact. There is a major impact difference, however dramatic it may be if one looks at it from a short term perspective or something more lasting. The pandemic is a phenomenon of limited duration and, although its precise extent is not known, if we look at examples from the past, it is not usually extended for more than 18 months (vis-à-vis the Spanish flu). On the other hand, long-term events, such as global warming, are factors that will continue to impact humanity for a long time after the end of the pandemic. Likewise, the geopolitical reorganization into two poles – the American and the Chinese – will also be strengthened for years to come.

In this way, the pandemic will have consequences, but it will not create new trends, just highlight problems that were already present. As already pointed out, in the new agenda the absolute priority will be the economic recovery, however in second place, some trends that were already present will continue, such as, for example, the crisis of multilateralism, that being the growth of unilateral actions by countries, always prioritizing the national interest. The ideal would be for the pandemic to stimulate cooperation among nations, but what is observed are mostly unilateral responses. Many countries, instead of offering aid, are closing borders and restricting exports. The lack of cooperation is also a direct result of the permanence of the same leaders in power. Another factor that will remain is the American trade and political confrontations with several other countries, especially China. Even before the pandemic, there was a move by many countries to steer away from the global export system, soon after the pandemic, the tendency is for countries to seek self-sufficiency.

Another relevant lesson learned is that it became clear the need for an international organization focused solely on detecting and fighting global pandemics. Many believe that the World Health Organization (WHO) already performs this role, but this is not the case. Despite WHO’s immense value to the world, its reach is limited, mainly because the financial contributions to the WHO are provided to meet specific goals. A clear example of this is the assistance that the US government provided, until recently to the WHO. Much of the US contribution was earmarked for the dissemination against malaria in certain countries, leaving the WHO unable to redirect to efforts in the fight against COVID-19.

Brazil, unfortunately, is among those that had one of the worst possible political reactions to COVID-19. This is also clear in the way Brazil has been handling its diplomatic efforts, with a large amount of disregard for other countries and even the WHO. A recent comment made by the Minister of Foreign Affairs Mr. Ernesto Araújo on his social media argued that the real danger is the apparent “communavirus”, blaming countries, judged by him as communists, as the  ones  responsible  for  the  virus  and  the  pandemic.  On  another  unrelated  event,  the Mexican government asked for Brazil’s backing in a measure aimed at emphasizing support for the WHO; however, due to American pressure, President Bolsonaro did not provide the much-needed  relief.  Currently,  according  to  Rubens  Ricupero,  there  is  no  country  of  the magnitude of Brazil that is so frowned upon by the international diplomatic core.

The Trump administration has already pointed out Brazilian maladministration in the face of the pandemic and is saying, preemptively, that it may be better to control the entry of Brazilians into the territory after the end of the pandemic, for the fear of reactivating the problem. This puts in check Brazil’s subservient diplomatic stance towards the United States, allowing Brazil to be pushed around. Complementary to President Trump’s comments is the US ongoing war against illegal immigration, where recently the US deported a large group of illegal Brazilian residents living in the US under almost inhumane conditions. This measure that was supported by Bolsonaro’s government. Furthering the point, Argentina has also criticized the Brazilian attitude towards the pandemic. It has also shown fear that the lack of control of the virus in Brazil may overflow beyond its borders. In this way, Brazil will be disregarded by other countries risking being left behind in the introduction of potential vaccine innovations and treatments for COVID-19.

Brazil’s bad conduct is already harvesting results, and Brazil was left aside in the upcoming preparatory meeting for the Peace Forum in Paris proposed by Macron. In the Asian front, the Chinese have been observing the Brazilian government’s offense for quite some time. As it seems, the Chinese are expecting an apology that does not appear in line with what the Bolsona’s team will likely do. It is believed that China will maintain its relationship with Brazil in a form that is convenient to them, posing no immediate threat to the Brazil-China investment relations. Nevertheless, there is no prospect for smooth diplomatic ties, which have already been observed by the lack of general interest in the latest government procurement opportunities. By allying with the United States, Brazil takes a stance of adopting the same enemies, putting itself in a complex corner with all these countries, among which many stand out as crucial trade partners for Brazil.

Unfortunately, in the area of international relations, neither the Judiciary nor the Congress acted as they should. The Brazilian constitution is very explicit when the subject is international relations, placing massive value in the harmonious integration with other countries in Latin America and the sacred reinforcement of Brazil’s national sovereignty. These founding principles, among others, do not seem to have been preserved by the latest foreign policy actions, even though the Congress can exercise considerable influence through measures such as the approval of international agreements and the appointment of key positions such as ambassadors.

Finally, it was pointed out that China’s performance in the face of the pandemic has had its ups and downs. At first, there was a significant delay in taking action and acknowledging the problem, along with the omission of crucial information. Nevertheless, at the time when it was broadly recognized that the pandemic was a major problem, China reacted very effectively, aggregating intelligent diplomatic cooperation, sending out health experts and medical products to several countries in need. In conclusion, China comes out of this pandemic with a mixed performance. It is noteworthy that China was not the country that best dealt with the pandemic, lagging behind other Asian countries such as Taiwan, Singapore and South Korea, countries that have suffered major impacts from SARS and MERS and that have demonstrated that a centralized authoritarian ruler it is not the the main factor collaborating in the fight against COVID-19.

 

1 Diego graduated in economics from the University of South Carolina and from Bern University in Switzerland. Mr. Ures is also Sidera Consult’s partner responsible for the Investment and Market Access division.

2 Mario is a student of the Universidade Federal do Rio de Janeiro where he is persuing a bachelor degree in Law. Mario is currently na interna at Sidera Consult (www.sideraconsult.com).

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