MercoPress. South Atlantic News Agency

Brazil can have a “pivotal role” in world trade talks

By UK Foreign Secretary Margaret Beckett (*)


It's one of my personal priorities as Foreign Secretary to get out and speak more to the business community. I simply don't think that it is possible to operate a successful foreign policy without working as closely as I can with the people who hold most of the global economic levers.

But I do know that speaking to any group like this is always a challenge. Because, perhaps for more than any other audience, I know that business people are always keen to cut straight to the bottom line. So today let me do just that and try to address the very simple issue of why, when I became Foreign Secretary in May last year, the very first bilateral visit I made was to Brazil. Well on one level it is a recognition of the growing strength of our bilateral ties. Business has always been at the heart of that. Today, our trade and investment links are stronger than ever and growing. Trade was up 4 per cent last year, heading towards the £3 billion mark. The UK has large and established investments in Brazil â€" the likes of Unilever, Pilkingtons, BP, BAT, Shell, Rolls Royce, BG Group, HSBC, Glaxosmithkline, and Cadbury â€" a roll-call of famous names from British business. Plus there is plenty of new investment going into the country as well. As this lunch demonstrates only too well, there is plenty of movement in the other direction too. As Brazilian companies increasingly step onto the global stage they are naturally looking to invest in open and dynamic economies: and we hope that is what draws them to Britain. So far much of that investment has been in the banking sector, but it is expanding into new sectors all the time. And one of the great opportunities which, of course, Britain offers is our position as a world centre for international companies to raise capital both through loans and through listing on the London Stock Exchange. We in the UK want to be Brazil's European partner of choice â€" but I recognise the reality that when Brazilian business thinks of Europe in some cases they will turn to other countries before us. I want us to try to change that. Your Chamber can play a part in it. The British government has made Brazil one of our priority markets for our trade and investment work. And the UK-Brazil Joint Economic and Trade Committee â€" my colleague Alastair Darling went over to Brazil in September for the first meeting â€" will help to take the strategic economic relationship we have to the next level. We want it to boost trade and investment by looking at barriers to trade, building partnerships and highlighting areas where we can be better working together. But, of course, that is only a part of the picture. The bigger reason why I chose to go to Brazil â€" and indeed why two other Cabinet Ministers and six other ministers went last year alone, and why we were so glad to host President Lula here in the UK â€" is because of Brazil's increasing role and responsibility on the international stage. And we are very clear that how Brazil engages with the rest of the world will have a significant impact on levels of global stability and prosperity â€" and that is something of direct interest to all of us, politicians and businessmen alike. The US historian Bradford Burns has written what many still think of as the standard English-language history of Brazil. He begins it with the line: 'Brazil, the affable and amiable giant, demands attention'. Now I'm not sure whether that would pass as high-grade political analysis in the Westminster think tanks, but I think it sums up the challenge which faces the rest of the international community pretty well. When, at the end of World War II, the current international institutions, including the United Nations, were being established, lessons had been learned from the failure of the previous League of Nations. People realised that if these bodies were going to have the authority they needed, then they would have to reflect the realities of world power. And that would mean co-opting the dominant nations of the day. That basic premise remains, I think, just as valid now as it was sixty years ago. What has changed is the geo-political balance of power. The realities of 1945 are not the realities of 2007. The simple fact is that â€" it seems to us â€" that if the multilateral institutions are going to keep that authority then they must find a way to accommodate the new and emerging powers. And that, of course, automatically includes Brazil. It is not just the size of Brazil's economy, its natural resources and its population that makes it too important to have anywhere other than centre stage. It is also the influence that Brazil is already wielding and still more has the potential to wield within the region, among the community of developing countries and on the international stage more generally. Because of the symbolic position of the UN Security Council still occupies â€" and because of the very real weight it still carries â€" reform of that institution will always grab the headlines. We in the UK remain strongly supportive of Brazil's bid for permanent membership of the Security Council â€" alongside Germany, Japan, India and permanent representation from Africa. But it's not just the UN. We are keen for Brazil to be far more involved across the board: leading efforts to shape the future of the region; engaging even more closely with the OECD; being a regular partner in G8 discussions, as they were at Gleneagles. Again, let me be blunt about it. The only arguments against broadening the international franchise in this way are ones of pure self-interest â€" keeping the club exclusive, in other words. But even if you judge on those pretty narrow criteria, it doesn't add up. Because, actually, the self-interest of all countries â€" developed and developing alike â€" is best served by involving and engaging the broadest possible consensus on global issues of common concern. I just want to touch on two of the biggest such concerns facing the international community at the moment: trade, and climate and energy security. The WTO round seems to be stalled. If we don't get it moving again we are all going to lose out. And we don't have very long â€" a matter of months at most. Brazil is absolutely key to getting agreement. As one of the big emerging economies it forms part of the triangular equation at the heart of the current negotiations: the EU and the US both need to move on agriculture, Brazil and others need to move on industrial tariffs. But beyond that Brazil can play a pivotal role in getting the G20 group behind any deal. And, indeed, I very much welcomed Brazil's announcement last month to offer duty and quota free access to Least Developed Countries starting early this year. And climate security is almost the perfect instance of where the global community faces a common threat which we can overcome only through common action. We in the developed world are responsible for most of the historical greenhouse gas emissions â€" and so we need to take the lead, as was agreed long ago. But it is the emerging economies which are projected to account for most of the increase in the emissions in the decades to come. So they have to be part of the solution. That is why Brazil's active engagement in the G8+5 dialogue on climate change is so crucial and welcome. I hope I'm not giving anyone the impression that this process â€" making room at the top table for Brazil and others in this range of discussions â€" is all about the developed world simply trying to share burdens. A country like Brazil has an enormous amount to gain from using its influence and leadership to nudge the Latin American region, and the world, in the right direction. And that is equally true for Brazilian companies and those who do business with them. Brazil is what economists call a reflexive economy â€" in other words fairly sensitive to the global economic environment. And it benefits â€" as we all do â€" from an open trading system. Last year, Brazil recorded a record trade surplus of some US$44 billion. So a deal on the WTO round is of very direct interest to everyone in this room. As the world's largest exporter of soya, beef, sugar and coffee Brazil will gain from liberalisation in the agricultural sector. And yet the majority of those record exports last year were manufactured: so agreement on Non-Agricultural Market Access could benefit the Brazilian economy by as much as US$300 million a year. In total Brazil could potentially be looking at an economic gain of some US$4 billion per annum or 0.6 per cent of GDP. And equally the flip side is just as true. If â€" and this is a very real fear and a very real possibility â€" we see a return to protectionism, if faith in the ability of the multilateral system to deliver is eroded, if we are forced to accept the global instability that comes with continued grinding poverty then we will all lose out. It's the same story with climate security. Indeed, the two are linked. Peter Mandelson, the EU Trade Commissioner, made a powerful statement last month on how trade can be part of the climate change solution. As he put it: 'we can literally export the tools and expertise to tackle climate change'. The challenge we face is a massive one. But so are the potential opportunities. The International Energy Authority estimates that US$17 trillion will be spent in the energy sector between now and 2030. As the imperative of tackling energy and climate security takes hold, a lot of that money is going to flow towards low-carbon technologies. For companies bold enough to move first and take those technologies to market, that will translate to profit and growth. And, as I'm sure you're all aware, the good news is that in many respects, Brazil is ahead of the game here. In 2004, Brazil invested over US$3 billion in over 100 wind-power, bio-mass and small hydro-power projects. It is the recognised world leader in the production and use of biofuels. The UK and Brazil â€" with South Africa and Mozambique â€" are working together to develop a sustainable biofuels industry in Southern Africa â€" with positive effects on poverty, and energy security, as well as climate security. This project will also help to develop the global market for bio-fuels. Put simply, climate security creates commercial opportunity. And again, as with the WTO, the costs of inaction are substantial and stark. At the end of last year, Nicholas Stern published the most comprehensive study yet of the economics of climate change. It showed that while it won't cost the earth to tackle climate change, it will â€" literally and metaphorically â€" if we do not. For business some of those costs will be in the form of direct costs including higher insurance premiums and higher energy bills. But the effects will be much wider and more dangerous than that. An unstable climate means an even more unstable world. There is hardly an area of conflict at present that won't be made worse with climate change. So we can expect more severe weather events, more drought, more tension over resources, more migration, more food shortage, more conflict. And this kind of instability and uncertainty bring risk: the one thing that every business in the world tries to minimise. I mentioned earlier how one American scholar began his history of Brazil. Let me conclude how another American ends theirs. Thomas Skidmore writes: 'Brazil's future will depend not only on their past but also on their vision of the future'. My trip last July was not my first but my first as Foreign Secretary. It confirmed to me that Brazil â€" its government, its business community and its people â€" does have such a clear vision of the future they want. It is of a Brazil engaged â€" politically and economically â€" in the region and the world, and accepting the responsibility and leadership which comes, inevitably, with this increasing size and influence. That is not always an easy path to tread. But we in the UK share that vision, welcome it, and stand ready to help Brazil as a partner and a friend. (*) Margaret Beckett's address to the Brazilian Chamber of Commerce Jolly Hotel, London Location: Jolly Hotel, London on Tuesday January 16, 2007.-