Report

Brazil’s Trade Policy: Moving Away From Old Paradigms

Pedro da Motta Veiga

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.).

Abstract

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.

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