OPINION. Why agribusiness boomed and Brazilian industry flopped

The year was 2003 and we were at the VIII Ministerial Meeting of the FTAA, the Free Trade Area of the Americas. It was November. The Lula Government had not yet completed its first year, but was already giving indications of what it would be. The meeting took place at the Intercontinental Hotel, surrounded by police and maximum security due to the passions that the topic of trade liberalization aroused at the time.

After the meetings between representatives of the private sectors of the 28 countries - who negotiated the sensitivities and opportunities of the commercial opening process and the definition of trade rules - came the meetings of the official representatives who, in theory, took the private interests to represent them in the name of the national interest.

I was there. I was the manager of international relations at Fiesp, and had the difficult mission of representing the position of a diverse manufacturing industry, which had some excellent subsectors but was rapidly losing its competitiveness. We needed to make difficult decisions to face globalization, the new logic of productive chains and the competition of a country that destabilized world trade: China.

The function of a continental Free Trade Area was exactly to guarantee favorable conditions of access to markets and trade rules among the countries of the Americas, so that they could gain scale, quality and price to eventually compete under more favorable conditions in the future, when facing China and Asia. Brazilian, Argentine, Mexican and Colombian products and services would have preferential access to the US and Canadian markets, and vice versa.

Trade rules for antidumping, government procurement, rules of origin and other instruments would be more liberalizing than the rules negotiated so far in the World Trade Organization, fulfilling Paragraph XXIV of the GATT. And all this would guarantee prosperity and collective enrichment for the Americas. But that was not how the Workers' Party, the CNBB, unions and Brazilian universities understood it.

On the contrary, the anachronistic vision of Yankee imperialism was in the formulation of the new commercial policy. I witnessed the moment when then Foreign Minister Celso Amorim diverged from the vision that his colleagues from Agriculture (Roberto Rodrigues) and Industry and Commerce (Luiz Furlan) had of the negotiating process.

Amorim wanted to impose an "ALCA light", a flexibilization that would reduce the integrating ambition. Rodrigues and Furlan envisioned the technical deepening of the negotiations to ensure access to agricultural products on the rise, and for manufactured goods to have adequate time to prepare for a future of sharper competition.

The impasse was taken to the President of the Republic upon return to Brazil. The rest is history. At the next Conference, in February 2004 in Puebla, Mexico, I witnessed the burial of the ALCA negotiations, led by Brazil and its "allies" from Mercosur with a "two-step approach" strategy that simply meant that each country would follow its will, but Mercosur was out.

Chile and Mexico went on with their lives and carried out the trade agreements of their preference. In retrospect, just look at the growth of trade of these countries with the US and Canada to understand the repercussions of that decision. In Brazil, ideology occupied the space of technique. The country's commercial policy, until then under the responsibility of the Ministry of Industry and Foreign Trade and the Ministry of Agriculture, began to be defined by Itamaraty.

The third-world foreign policy of the Workers' Party became the state policy, incorporating commercial guidelines and emptying the relevance of other ministries. And so almost a quarter of a century passed in which the same political group governed for 18 years and made commercial policy an appendix of foreign policy. What did we learn?

The numbers show. The participation of Brazil's manufacturing production, which once reached 25% of GDP at the end of the 80s, is now no more than 10%. The competitiveness of the Brazilian industrial economy has not moved for decades, among other reasons because the modernization of the rules that were envisioned for hemispheric integration - with reduction of labor costs, reduction of tax burden, transfer of technology and direct investment in industrial capital - ended up moving in the opposite direction.

Thanks to this same protectionist, developmentalist, anti-imperialist and statist vision of the world, Brazil became more expensive, less competitive, and with an industrial policy that only benefits the king's friends. On the other hand, agribusiness - competitive since the beginning of the negotiations - followed its agenda of accessing markets around the world, and became the driving force of our economy by its own merits, without the massive subsidies that other agricultural countries (US, EU and Australia) give to their producers.

Integrated into international value chains, the agricultural sector invested in technology and has its market practically open. Today, the international trade generated by it is the last source of external resources that keeps the country financially alive. It's time for Brazil to learn from past mistakes and change the command and characters that insist on mistaken ideas. Christian Lohbauer is a political scientist.