This paper is a section of the forthcoming publication “Brazil as an Economic Superpower? Understanding Brazil’s Changing Role in the Global Economy” (Washington, D.C.: Brookings Institution Press), Lael Brainard and Leonardo Martinez-Diaz (eds.).
In the 1990s, Brazil went through important trade policy changes. It carried out unilateral liberalization and also engaged in an ambitious project of regional integration (Mercosur) and in various trade negotiations. These changes, however, took place within the limits set down by the paradigms of foreign and trade policies inherited from the period of protectionist industrialization. This explains both the specific features of unilateral liberalization (and its results) and the defensive stance systematically adopted by Brazil on the different trade negotiation fronts. In the past few years, these paradigms have been challenged in the field of trade negotiations by interests whose emergence is associated with structural changes in the economy, especially the consolidation of a highly competitive agribusiness. Under this scenario, Brazil is being pressured to revise its paradigm of foreign and trade policies and to deepen its integration with the international economy. As a result, tensions have arisen between, on the one side, the old paradigms that drive government policy choices and, on the other, pressures for deeper integration. Although the results of this conflict remain an open issue, if Brazil is to go further in its international integration, a new policy agenda is required and the country’s global and regional strategies need to be revised.
I think some people are overreacting — the people who say, oh this is the end of the U.S.-China relationship as we know it. That’s not necessarily true. They could be lenient to Trump and treat Taiwan differently. We need to know a lot more and we shouldn’t pre-judge the situation but we shouldn’t trivialize it either.
I think the scratches on the oracle bone suggest that they may be more lenient with Trump than with Tsai Ing-wen. We have already seen examples of ways that Beijing is pressuring the Tsai administration because it has not complied with Beijing’s demands about the 1992 consensus.
China has a couple of options here. It could choose to be unhappy about [Donald Trump's phone call with President Tsai Ing-Wen], but not make it a big issue. The other way they could see it is the first step in a kind of probe towards moving towards an official relationship. [Beijing] might calculate that it is better to react vigorously and strongly with the first step rather than wait for the situation to get worse.