Cooperação Brasil-Índia: dinâ micas e perspectivas Edgard Leite (org.) Programa de Estudos Indianos Universidade do Estado do Rio de Janeiro
Cooperação Brasil-Índia: dinâ micas e perspectivas Edgard Leite (org.) Programa de Estudos Indianos Universidade do Estado do Rio de Janeiro
Editora Verve/2014
Copyright © 2014 Edgard Leite (org.) Revisão
Patrícia Mota Freitas
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Carolina Camargo
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DADOS INTERNACIONAIS PARA CATALOGAÇÃO NA PUBLICAÇÃO (CIP)
C776 Cooperação Brasil-Índia: dinâmicas e perspectivas / Edgard Leite, organizador. – Rio de Janeiro: Verve, 2014. 104 p. ; 21 cm. ISBN 978-85-66031-80-5 Programa de estudos indianos, Universidade do Estado do Rio de Janeiro. 1. Relações Internacionais. I. Leite, Edgard . II. Título. CDD- 327 Cíntia Marques S. dos Santos – Bibliotecária CRB7 provisório 0072/13
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SUMÁRIO
O Progra ma de Estudos Indianos 7 Prefácio 11 India-Brazil relationship 13 Ashok Tomar
India-Brazil in the 21st Century: Transformative Convergences 16 Renato G. Flôres Jr.
Brazil-India Relations through the Lens of Political Economy 36 Adriana Erthal Abdenur
Perspectives on Brazil-India Commerce 55 Leane Cornet Naidin
Prospects for academic interaction between Brazil and India 72 Edgard Leite
Visões sobre a história de Goa: perspectivas e fontes sobre as transformações culturais nos séculos XVI e XVIII 85 Patricia Souza de Faria
Programa de Estudos Indianos
Membros do Conselho Acadêmico Dr. Amâncio Jorge Nunes de Oliveira
Universidade de São Paulo, Brasil Dr. Amit Bhaya
COPPE- Universidade Federal do Rio de Janeiro Dra. Aparajita Gangopadhyay
University of Goa, Goa, India Dra. Archna Negi
Jawaharlal Nehru University, New Delhi, India Dra. Célia Tavares
Universidade do Estado do Rio de Janeiro, Brasil Dr. Cláudio Pinheiro
South-South Exchange Programme for Research on the History of Development Dr. Dattesh Parulekar
University of Goa, Goa, India Dr. Dilip Loundo
Universidade Federal de Juiz de Fora, Juiz de Fora, Brasil
7
Dr. Krishnendra Meena
Jawaharlal Nehru University, New Delhi, India Dra. LEANE CORNET NAIDIN Pontifícia Universidade Católica, Rio de Janeiro, Brasil Dra. Lúcia Rabello de Castro
Universidade Federal do Rio de Janeiro, Brasil Dra. Maria Regina Lima
Instituto de Estudos Sociais e Políticos, UERJ Dra. Monica Hirst
Universidad Nacional de Quilmes, Argentina Dra. Patrícia Souza de Faria
Universidade Federal Rural do Rio de Janeiro Dr. Rubens Turci
Universidade Federal de Juiz de Fora, Juiz de Fora, Brasil Dr. Sanjay Salunke
Dr. Babasaheb Ambedkar Marathwada University, Aurangabad, Maharastra, India Embaixador Stelio Amarante
Assessor de Relações Internacionais da Prefeitura do Rio de Janeiro Dr. Sital Dhillon
Sheffield Hallam University, Sheffield, United Kingdom 8
Dr. Varun Sahni
Jawarhal Nehru University, New Delhi, India
Equipe técnica Secretário Executivo
Luiz Mário de Souza Secretária de Projetos
Simone Souza Estagiária
Carolina França Tristão Batista
Realizacão Programa de Estudos Indianos da Universidade do Estado do Rio de Janeiro Embaixada da Índia no Brasil Departamento de Cooperação Internacional da Universidade do Estado do Rio de Janeiro
9
Prefácio Edgard Leite*
O Programa de Estudos Indianos da UERJ realizou, em 9 de abril de 2014, o “I Workshop Cooperação Brasil-Índia: dinâmicas e perspectivas”. Fruto do esforço conjunto de pesquisadores do Rio de Janeiro, todos comprometidos com o empenho comum de promover o desenvolvimento das relações entre Brasil e Índia. O workshop contou com o decisivo e fundamental apoio da Embaixada da Índia no Brasil, através do Embaixador Ashok Tomar. O resultado desse momento especial está agora publicado, em inglês. Estiveram presentes ao workshop pensadores que examinaram sob diferentes ângulos o atual momento das relações bilaterais. O Embaixador Ashok Tomar fez um retrato atual da intensidade das relações entre nossos dois países, ressaltando a importância crescente que ambos adquirem um para o outro; o Dr. Renato Flores expôs a profundidade dinâmica das interações entre as duas nações; a Dra. Adriana Erthal Abdenur analisou Brasil e Índia sob uma perspectiva histórica e política; a Dra. Leane Cornet Naidin realizou uma rigorosa e substancial análise do quadro atual das relações comerciais entre os dois países; e o autor deste prefácio discutiu a importância, para o desenvolvimento do nosso país, de uma aproximação acadêmica consistente entre Brasil e Índia. Também participou do workshop o presidente da Câmara de Comércio Índia-Brasil, o Sr. Leonardo Ananda Gomes, que fez uma avaliação positiva sobre o presente e o futuro das relações comerciais entre Brasil e Índia. Como debatedores, contribuindo com reflexões importantes, estiveram presentes o Dr. Kai Kenkel, da 11
Pontifícia Universidade Católica do Rio de Janeiro, a Dra. Miriam Saraiva, do Programa de Relações Internacionais da Universidade do Rio de Janeiro, e a Dra. Márcia Moreira Leite, do Departamento de Cooperação Internacional da Universidade do Estado do Rio de Janeiro. Como bônus, este livro traz também um artigo da Dra. Patrícia Faria, da Universidade Federal Rural do Rio de Janeiro, e integrante do Conselho Acadêmico do PEIND, sobre a história de Goa, tema que reúne muito estudiosos do Rio de Janeiro, movidos, certamente, pela existência de laços históricos maiores que unem, especificamente, o nosso país àquele estado indiano. Por fim, acreditamos que este é mais um momento no esforço conjunto que pesquisadores brasileiros e indianos, de diferentes origens e especializações, têm realizado, no sentido de unir Brasil e Índia por laços cada vez mais fortes, na direção de um futuro comum de desenvolvimento. *Coordenador do Programa de Estudos Indianos
www.peind.org
12
India-Brazil relationship Ashok Tomar*
India and Brazil currently enjoy a diversified relationship, covering many themes and operating at multiple levels. Bilaterally, we see the relationship growing exponentially at the political, commercial, cultural, academic and intellectual levels. Our strategic partnership, established eight years ago, also manifests itself at the plurilateral level in fora such as IBSA, BRICS, BASIC, G-20, G-4, and in the larger multilateral arenas such as the UN, WTO, UNESCO, WIPO, etc. The relationship between Indian and Brazil is characterized by regular exchanges of visits at the political level, including between Head of State/Head of Government on both sides. The latest in this grand tradition was the highly successful visit of H.E. Mr. Narendra Modi, Prime Minister of India, to Brazil, from 14-16 July 2014, to attend the VI BRICS Summit in Fortaleza. During this visit, he had a fruitful bilateral meeting in Brasilia with H.E. President Dilma Rousseff of Brazil on 16 July 2014. Both leaders confirmed their commitment to further strengthen and deepen the bilateral relationship. Brazil is one of the most important economic and commercial partners of India in the entire LAC (Latin America and Caribbean) region. Our cooperation is moving up the value chain in areas such as Information Technology, Pharmaceuticals and Life Sciences, Aviation Industry, Food and Energy Security, and Science & Technology research. India-Brazil bilateral trade has increased substantially in the last two decades. India’s exports to Brazil, which were of US$6.30 billion in 2013, consist mainly of processed petroleum products, pharmaceuticals, textiles, chemicals, machinery and equipment, auto ancillaries, and fertilizers, etc. Brazil’s exports were of US$3.13 billion 13
in 2013 and consist of crude petroleum, chemicals, aircrafts, iron ore, etc. It was heartening to see visits to Brazil by around 100 Indian companies, sponsored by various export promotion councils during 2013. There have been two way investments between India and Brazil. While Brazilian companies have invested in automobiles, IT, mining, energy, biofuels, and footwear sectors in India, Indian companies have invested in such sectors as IT, pharmaceutical, energy, agri-business, mining, aluminium production recycling, fertilizer production, and engineering/auto sectors, etc. Indian companies such as TCS, Wipro, Infosys, Cadilla, Mahindra, L&T, Novelis, Renuka Sugars, United Phosphorus, Polaris, Glenmark and others are present in Brazil. The Brazilian companies present in India include Marco Polo (buses), Vale (biggest mining company), Stefanini (IT), Gerdau (Steel). Total estimated investments by Indian companies in Brazil have crossed US$4 billion. There is enormous Brazilian interest in India’s culture, religion, performing arts and philosophy. The first forms of Indian Culture to reach Brazil were spiritual, philosophical and religious in nature. Folkloric identities and celebrations from India relate very much to the exuberant and colourful nature of festivities such as the typical dances and parades of north and northeast of Brazil. The first classical art to come to Brazil was Bharatanatyam dance, with Odissi, Kathak and Kuchipudi to follow later. Not only for their distinct character but also due to the exoticism of costumes, ankle bells and head dresses, impacting make-up and angular postures are immensely appealing to Brazilian eyes. The telecasting of the Brazilian soap opera ‘Caminho das Índias’ (Paths to India) made a great impact in enhancing the consciousness of India in the Brazilian public mind. In classical music, Brazil already has a share of those who have learnt Sitar, Tabla and other instruments and not only play some of the original ragas and 14
rhythms but go beyond to create fusion music in conjunction with Brazilian artists. There are numerous organizations teaching Yoga, all over Brazil. Several spiritual gurus and organizations have chapters in Brazil. India cinema is also popular among Brazilian people. Indian Film weeks organized by Embassy and Consulate have always received good responses. We have organized Indian film weeks in AugustSeptember 2013 celebrating ‘Hundred years of Indian Cinema’ in seven Brazilian cities. I am happy to note that universities and academic institutions in both countries are now increasingly engaging with each other and taking an active interest in developing the academic discourse. There is a greater exchange of visits between academicians and institutions and seminars on subjects of mutual interest. Primary amongst such institutions in Brazil is the State University of Rio de Janeiro (UERJ), which has started a programme on India Studies. This has been due to the efforts of Prof. Edgard Leite from UERJ. I congratulate him for his initiative. The latest in this programme on India Studies is the workshop that Prof. Edgard Leite organized on India-Brazil Cooperation: Dynamics and Perspectives. I attended and participated in the workshop and was impressed with the high-level of contributions that were made by academicians who spoke on various facets of India-Brazil Cooperation viz. academic, political, commercial, and economic. I hope the readers will find this publication, which is the result of the contributions by the academicians, to be useful, and that this will be a valuable addition to the study of India-Brazil relations. *Ambassador of India to Brazil
15
India-Brazil in the 21st Century: Transformative Convergences Renato G. Flôres Jr.*
Introduction: converging differences Brazil and India.
Brazil and India are a peculiar pair, and have historical evolution and trajectories that can hardly be distinguished from each other. While the former can be described as a young nation, with little more than half a century of history, marked by a crystallized, peculiar and attractive culture – a mix of European, African and Indigenous groups, the latter has an impressive and long past, which makes it one of the oldest and most elaborate civilizations in the world. It is, to say the least, intriguing, that despite so many differences, people in these two countries share a vast number of similarities in terms of behaviour and outlooks on everyday life, and life in general. I avoid making the absurd mistake of matching religions, beliefs, philosophies. I rather attempt to identify converging features expressed in the great ease at communicating, in the spontaneous joy and loquacity, as well as in the way that happiness is manifested in great popular festivities and events. While Brazil features the well-known Carnival, the Cirio from Nazaré and so many other manifestations, India is second to none, with its colorful, joyful, and equally chaotic Holi, the festivities that celebrate Lord Ganesh’s birthday – Ganesh Chaturthi – in Mumbai, and so many other extremely rich manifestations, not to mention its almost always innate happiness. The young and millenary civilizations are united by their diversity in a number of aspects, mainly cultural ones. 16
Besides, the striking contrast between extreme poverty and overwhelming wealth, as well as the already mentioned joyful and “good-natured” people living among poverty and adversity, the painful and successful events involving the huge, complex and developing democracies, the struggle against corruption that has long infiltrated in red-tape and clientelistic systems and has been radiating into several sectors of society are virtues and problems where our interests converge. We must get to know each other better. Dialogue, which is the beginning of every and any other action, and is easy to come up between us, must be extended, deepened, propagated and reproduced and always be kept at the most intimate and varied possible level, as it is where our strength lies. As such, it must be the basis for our convergence. I shall further deal in a more detailed manner with this single and basic notion in the sections that follow. As in all dialogue, there are fuzzy, less agreeable topics, and there are others on which conversation runs smoothly. One goes faster from intention to action than Arjun’s arrows. Several arguments for convergence
There are a number of possibilities for dialogue. I shall list three examples. India has a sophisticated offset system, which is grounded on a broad normative basis and is successfully operated in the defense industry area, in its several international acquisitions. The India system is, in truth, well-known and debated worldwide. Brazil has given continuity to its initiatives in this same industry as part of a coordinated and modern effort in the defense area. As such, Brazil 17
is interested in knowing Indian practices, given the unavoidable tendency to increase our exports and imports in the sector. At FGV we have been putting together a group intended to make in-depth analyses of the topic, which has counted with the invaluable help of Dr. Laxman Kumar Behera from the Institute for Defence Studies and Analysis, in New Delhi, who has been with us at the India Chair1. The Ministry of Defence in its turn has been working on the Brazilian position on offset, which will be reflected upon legal documents under discussion. The bringing together of these initiatives does not mean the adoption of an Indian approach, which is a complex one, and, to a certain extent, highly conditioned to the country’s institutional context. Instead, it will be translated into a useful instrument for reflection, comparison and help in the process of seeking a national solution. In the agricultural area, in spite of the divergence between distribution of properties and predominant means of production, there is room for exchange of techniques and practices on both sides, irrespective of the striking differences between India, where around 71 percent of the population depends on agricultural production, and Brazil, where less than 20 percent depend on agriculture to live. It must be stressed, however, that agribusiness in Brazil accounts for 22 percent of the country’s GDP. One could even defend – though with some exaggeration – the existence of a certain complementarity between both models of agricultural production. From a more general perspective, the social democratic experiences open up a vast space for dialogue. Both countries have bicameral systems, though with distinct electoral modes. The number of federal States and 1. The India Chair is an Indian Embassy and FGV’s joint initiative, which already completed three years of existence. Every year it receives an Indian professor or researcher, which makes it an important instrument for dialogue and propagation of Indian knowledge. Dr. Kumar Behera was the awarded professor for the second year, in the 2012-2013 period. 18
territories is roughly the same, and there are also similarities pertaining to both the power imbalance among the components of the party system and several characteristics of their constituent parts2. Notwithstanding the idiosyncrasy involving a great deal of the themes on both sides, there is a vast common ground that should be better known and analyzed. I shall not deal with the broad and fundamental poverty issue and the struggle against poverty, for a number of specialized and authorized expositions have been made by more competent authors3. I have mentioned, from the most specific to the most general, three relevant examples of arenas for dialogue; there are a number of others. However, one should go beyond the dialogue and at this point it seems inevitable to discuss the economy. It’s always the economy I – the commercial issue
Of the following two classical modes of economic exchanges between nations, i.e., commerce and direct investment, my argument is that, in India’s case, the latter offers greater possibilities. I shall explain. There is a widespread belief among old and experienced Brazilian commercial negotiators that involves our relation with India in Geneva’s multilateral organism – originally the GATT, currently the WTO. The belief goes that4 in every big negotiation we always start 2. It is hard to avoid making certain analogies between the Congress Party and the PMDB, for example –despite the outcomes of recent elections -, but I would rather leave such task for others, who may choose to deal with the theme in more specialized texts. 3. Particularly by the SAE (Presidency of the Republic’s Office) Minister of the State during the 2013 Brazil-India Bilateral Dialogue at the Ministry of Foreign Affairs in Brasilia; an annual meeting of the productive official partnership between both countries. 4. Here, with all due respect, I shall quote the gentle Honorable Ambassador Hardeep Singh Puri, and remind his first steps in a multilateral organism, specifically the GATT, which were also reminded by the Honorable Ambassador Ashok Tomar during an event at UERJ. 19
together and make up a formidable alliance feared by many developed partner countries. Such thing happened, for instance, in the Uruguay Round, when we, united, tackled North-American huge demands in the service sector by creating an impasse that marked the end of the first stage of the Round (there were two more, according to this view). This solid union developed up to almost the end of the negotiations, when India eventually took a diverging position from ours. This “rule of thumb”, which carries the weight and flavor of any empirical rule, does not derive from curse, stubbornness or animosity between the two countries. As a matter of fact, it is quite easy to understand. Both countries hold similar views on how to make further progress in commercial liberalization, as there are disparities pertaining to the development levels and the immense conflicts of interest that underlie any commercial policy. Thus, on the opening of important negotiations, our alignment before the well-calculated moves by members with bigger economic power comes almost automatically. Such alliance gradually solidifies, as negotiations are complex and the dismantling or reconstruction of offers and propositions is a delicately woven fabric that calls for skilled hands. When the end comes close, there are few or no big issues: it is time for details, for the trading of sectors and products. It is precisely at this stage that our commercial capacities involving our protection framework are distinct. In a commercial war, we become aggressive and competitive in agribusiness and shy in the service sector. India is practically the opposite; in the manufacturing sector, we are competitors or have opposing interests. Positions are misaligned. Moreover, in agriculture and animal raising, for example, it is striking that there is an identity in terms of the products for which we occupy an outstanding position in the world market, as shown in Table 20
I, even though it was obtained in a distinct manner. Such an identity has been the cause for many fears involving specific liberalization measures in this area. Table I. Brazil and India relative positions in the world production of several products in agricultural and animal raising sectors – 2010.
Product
World Production
World Position
(in millions of tons)
Brazil
India
Sugarcane
1.711,1
1st
2nd
Orange
68,3
1st
3rd
Beans
22,9
2nd
1st
Tobbaco
7,0
2nd
3rd
Papaya
11,6
2nd
1st
Castor bean
1,8
3rd
1st
Cow’s milk
600,8
4th
2nd
Cotton, seeds
42,8
4th
2nd
Coconut
59,4
4th
3rd
Source: FAO
In 2011, in the world trade of goods, Brazil was the world’s sixteenth biggest exporter and the fifteenth biggest importer. India was, respectively, in the thirteenth and eighth positions. To put these figures in perspective, as far as exports are concerned, Brazil ranks between and above The United Arab Emirates and Australia5, and below Switzerland and Thailand; all four of them are not very far from 5. In all the ranking, the countries are ordered from the most to the least important. 21
Brazilian performance. In exports, India is obviously surrounded by the two countries that exceed Brazil, ranking below Mexico and Taipei. In terms of imports, Australia and Turkey rank above us and below us are Thailand and Switzerland; again, with a narrow margin. India is below Hong Kong and Canada, but above Singapore and Mexico. If we consider the service sector, our country is the eighteenth biggest exporter and tenth biggest importer, which seems to point at its greatest deficiency in this sector; India is the eighth biggest exporter and seventh biggest importer. Table II summarizes both countries’ commercial performance. Brazil, despite its great potential, is not part of the international commerce league, though it is an important middle player. The same can be said about India, although it has a bigger presence in terms of commercial flow of both goods and services. Table II. Profile of goods and services commercial flow for both countries in 2011 (figures expressed in billions of US$)
Exports
Imports
Goods
Services
Goods
Services
Brazil
256
37
237
73
India
305
137
463
124
Source: WTO
Notwithstanding all this, our commercial exchanges (goods) have been going through a period of growth and significant diversification, more so on the Indian side. India has been oscillating near the twentieth position as a destination of our imports, but it already ranks among our ten biggest suppliers. On the one hand, up to May 2013, India had sold us the equivalent to US$ 3,2 billion in goods, overcoming traditional partners 22
such as Japan, Italy and France. On the other hand, our exports to India amounted to meager US$ 1,2 billion. Table III shows the ten main imports, from January to May 2013. As can be seen, apart from the high-valued fossil fuels, other items show low export volumes. Table III. Ten biggest Brazilian imports from India – January to May 2013
Products
Value
Percentage
Fueil oils (diesel, “fuel”, etc.)
1.945,2
60,8
Heterocyclic compounds, their salts and sulphur compounds
142,1
4,4
Textile, synthetic or artificial threads
115,7
3,6
Medicine (human and veterinary)
75,0
2,3
Automobile and tractor vehicle parts
70,0
2,2
Insecticides, herbcides, anticides and the like
63,5
2,0
Nitrogen-function compounds
49,3
1,5
Organic and synthetic dye materials
36,4
1,1
Heaters’, dryers’ and others’ parts
27,3
0,9
Pumps, compressors, fans and their parts
25,3
0,8
TOTAL
3.202,0
100,0
Source: SECEX/MDIC
Although I welcome the growth seen in our trade of goods, I do not envisage great ideas or impacting suggestions besides the traditional (and often significant) measures to facilitate trade or an eventual improvement in some specific sectors, like the defense industry. The last option raises the issue of greater and high technological goods, which are necessary to modernization and improvement of 23
our economic competitiveness. Up to now, as far as acquisition is concerned, we have on many occasions succeeded in arbitrating between the USA and the EU, and managed to obtain more profitable conditions and arrangements. The space for maneuver for such operations will be reduced if a unified platform results from a full commercial agreement between the two powers. In this regard, our dependence on those two economies will not only increase, but we will also have to pay a higher price for their products as well. It is necessary, however, to strengthen the links with other partners. The opportunities, in the Indian case, are, to my view, concentrated on the direct foreign investment sector, as we shall discuss in the following section. It’s always the economy II – broadening the issue
India has shown to be more active than Brazil with respect to Direct Foreign Investment. In keeping with the tendency in exports, as shown in Table III, the country has an active presence in varied sectors in chemistry, with significant developments in fertilizers and pharmaceuticals, and – as far as services are concerned – information technology sectors. Mining and energy are other promising sectors. A well-distributed network of honorary consuls gives support to the growing diversification of investments – already in the region of US$ 2,5 billion. Such network counts on skilled professionals to respond to their investors’ needs. The reverse process calls perhaps for a greater support by the subcontinent authorities6. There has been a significant investment in the automobile industry, but it is far from its actual potential. An 6. This situation might get better with Prime Minister Narendra Mori’s victory, who is fairly open and pragmatic as far as foreign direct investment is concerned. 24
effort to reverse such situation will depend on Brazil’s good-will, combined with a better understanding of the intricate Indian legal system – though not in principle – , more complex than ours. We still lack a more strategic view, a topic that will be dealt with in the next section. In the service sector, India is the world’s second greatest exporter of computer and information technology services, ranking very close to EU, which occupies the first position, and well above the USA, which comes third. However, we are the world’s fourth greatest importer in this area, after EU, the USA and Japan. As there is good local qualification in this speciality, there is room for greater Indian investments here, besides those which are currently being made. We would still have to tackle the technological transfer area. It is unnecessary to remind that this concept is a (romantic) rhetorical figure: no one transfers technology to nobody, at least – if we want more candid souls – modern technology that counts. This truth that is hard to accept does not preclude the possibility of building partnerships, with mutual benefits, which may favor the exchange of know-how, techniques and procedures. Though India has shown evidence of more concrete progress, both countries still have significant deficiency in transmitting to the productive sector their discoveries in the fields of pure investigation and science. In a field that is usually the outcome of several developments in multiple instances, which often come unexpectedly from spontaneous projects, a better positioning is necessary. I am not advocating a centralization or greater range of activities. However, it seems convenient to have a better balance of mutual needs, which is more adequate to commercial politics. A serious positioning with respect to the mutual needs involving the very high technology field would be of great help. 25
Again, the defense area, Information Technology as well as aspects selected from chemistry could be targets for joint entrepreneurships7. Some complementary measures could be an analysis of the tariff and non-tariff barriers aimed at facilitating the entry of high-technology products, the support for establishing strategic alliances and a skilled prospection of both markets – considering other Asian options, be it China, from where sophisticated telecommunication and electronic products are beginning to come, be it Japan, Thailand, Singapore and, for some sectors, Indonesia, Malaysia and the Philippines – , in search of new partnerships and direct investments. Finally, it would be worth beginning an initiative with a view to reaching a convergence of positions on international regulations. We must have clear positions on the whole and varied scope of norms that, directly or indirectly, rule or affect international commerce of goods and services. This implies decisions based on which aspects we want to “be aligned with foreign partners” – and, hence, with what pattern – and with which, consciously or for various reasons, we want to remain unaligned with. It is a hard but crucial and fundamental task to face the new reality of commercial wars. It anticipates alliances that can mitigate growing and invasive measures taken by developed economies, identify others with different strategic partners – like China and Japan, and Asian blocks in general, or still within the scope of South America – and clarifies what wisely and fundamentally we want to keep as idiosyncratic. 7. It must be noted that, within the context of Brazil-India partnership, there already is a Joint Committee in the Defense Area – so far, more focused on the exchange of concepts and information, but taking the first steps to begin a cooperation in the equipment area –, as well as a Mixed Science and Technology Commission, which has pharmaceuticals and nanotechnology among its priority areas. 26
Within the context of agribusiness, despite the challenges posed by the topic on both sides, it is high time we took the leadership in this field. The effort must be comprehensive and must also involve Telecommunications, institutes like the INPI and the IPI, as well as technical organs like the ABNT, in Brazil, and their Indian counterparts. The effort must also be implemented in a hierarchical and well-coordinated manner, which is crucial to enable a single and consistent voice abroad, in each one of the relevant debates. Still with respect to agriculture and animal raising, there is a double urgency on our side, due to the still untapped and immense food, chemical and industrial capital in Brazilian fauna and flora, as part of its huge regional diversity. In almost all areas, from honey to beer, including cheese, herbs, flour, oils, Amazon products can replace several classical culinary ingredients and much more. There is an extremely coveted capital that is the target of several studies by foreign specialists, which will all be eventually plundered and barely used by us if not regulated according to modern, international and intelligent criteria that can both protect property rights and allow flexibility in their use and lucrative exploitation8. Similar examples can be mentioned on the Indian side, as the country has a vast wealth of spices and other products9. A more attentive and pro-active position from both governments would be welcome on several of these issues, which can be more sensitive to sector demands. An interesting final example is the REACH, an 8. For more on the topic, see R. G. Flôres Jr. 2013. Les Tribulations d’une Puissance Gastronomique Émergente. Mimeo. (Also published in a summarized version as Chroniques Gastronomiques, Libération, Paris). 9. It is worth noting that in the context of BRICS, at the Senior Official Meeting on science, technology and innovation that took place in September 2011, in Dalyan, China, an agreement was reached to gradually strengthen the links and cooperation in ten strategic areas; food security and sustainable agriculture was one of them, although the food asset issue was not exploited. 27
European Commission absurd Directive on chemical substances, an issue that is so far controversial and hardly ever debated by emerging nations. The REACH has resulted in an increase of 20 to 50 percent of costs for Brazilian exports to the EU. Part of this additional costs have been perpetuated in terms of controls, bureaucratic demands, license renewals and fees paid to dispatch agents and other authorized (by the REACH complex) officers in the Union countries. Besides, it makes it impossible for several small companies in the sector to export to the European Union. This last topic is so relevant that it will be dealt with in more depth in the section that follows. Strategic positioning
Both diplomacies have common attributes – particularly in the excellence and ability shown by their respective staff – and complementary qualities. The Indian side has managed to skillfully work out wisely ambiguous positions, and was able to move around several world power centers and relevant themes to global governance10. Brazilians competently negotiate a constructive view in the international scene, with much concern about mutual respect and absolute priority given to dialogue and diplomatic solution, which some analysts consider to be a modest position, given the country’s size and weight – according to multiple criteria. Unlike India, Brazil does not aspire to be a super power. It is not the purpose of this paper to make a deep analysis of 10. Ganguly and Pardesi (2009) is a frequently cited reference on India’s external policy and international positioning, from the independence in 1947 until 2007. 28
the reasons behind the aforementioned positions; both countries work together for world peace and on how to implement it and secure it – as in the issue involving Responsibility to Protect versus Responsibility while Protecting. Both countries have respect for the United Nations, coupled with a legitimate aspiration to reform the organization, particularly with respect to the Security Council. As non-aligned partners, they share an extensive agenda of common problems and positions, though they might diverge at a more detailed level11. The importance these two countries have, which will certainly grow, forces them to deepen certain common international positions. The first positioning refers to the norms issue, which has a growing impact on globalized economy, mainly with concern to commercial matters. Modern commercial war will be fought at this level and the attempt that is currently being negotiated at setting up a Transatlantic Alliance for Trade and Investment between the European Union and the United States is nothing less than a powerful first step towards establishing a common ground in terms of patterns and norms for the advanced Western world. As thoroughly explained in the previous section, we must work together in this field and set up, without prejudice or proselytism, a front to zeal both for our technical and market interests. Within this perspective, ASEAN can be seen as a valuable ally12, as well as other emerging or developing partners. The second aspect is concerned with the revolution that will occur in sea routes. Both Brazil and India are seriously interested 11. See the WTO emblematic case, which was previously dealt with in this paper. 12. Both countries are also strategic partners at the ASEAN, signatory of the Treaty of Amity and Co-operation. 29
in the matter. The former, with its long Atlantic coast, and the latter, which is conspicuously situated in the Indian Ocean, with the Arabian Sea to the West and the Bengal Gulf to the East. At some point in a not so distant future, the exact date does not matter for the sake of the argument, there will be a radical restructuring of the ocean governance, until recently secured as one of the Pax Americana externalities. Along the Pacific-Indian continuum, China and India will be the actors of the greatest architectures, as Brazil will be for the South Atlantic. Every commercial nation is interested in having safe access to routes in “all the seven seas”. Preparations made by the Brazilian and Indian navy according to a concept of safety and defense projection for each one of the countries13 are already evident; moreover, it is necessary to make a joint effort within instances of commercial intelligence and energy routes, so as to program the needs and adaptations that the new reality will bring. Neither of the two countries has a projection in the Arctic, a locus where new routes will be created for several new powers; a greater strengthening of links as concerns this matter will respond to interests that are basically convergent. A last positioning occurs at a higher level and involves two successful arguments made by both countries: IBAS (India, Brazil and South Africa), which has just completed ten years of existence, and the BRICS (Brazil, Russia, India, China and South Africa). The former has been thoroughly discussed by other peers14. Therefore, in the next section I will deal with considerations on the BRICS from a broader strategic perspective. 13. As described in their respective white books of defence. 14. See, for example, numerous publications by FUNAG on this peculiar and interesting association, which has been in existence for over ten years. 30
I n dia a n d B r a z i l i n r e g iona l org a n i sm s a n d integration
In the light of previous considerations, it is inevitable that both nations play a significant role within the context of a vast array of actors – multilateral organisms, global governance institutions, several international associations, main regional integration – which make up the international scenario. In this context, it is worth highlighting a most interesting experiment made by the BRICS: revolutionary tactics for the strengthening of links and rapprochement (and hopefully integration) among countries located in distinct continents, many of which without common borders, and all of them with almost opposing histories and trajectories of social economic development. It is necessary to stress that the current BRICS is not an economic concept15. While the IBSA constitutes a more intimate group, which allows several experimentations, the BRICS opens up a platform for a much wider and absolutely global protagonism. If it continues to wisely avoid both the excess of bureaucratization – a risk always present – and an infantile confrontation North versus South, or Developed versus Emerging, a positioning that has not occurred so far, despite the attempts at polarization made by some nations outside the group, the BRICS will be destined to become an ever insurmountable actor within the global context. On the one hand, the BRICS countries have enough weight to make themselves listened to in organisms such as the International Monetary Fund or the World Bank, in institutions 15. This topic is dealt with in depth by Flôres (2013). For more on the development of the group until the beginning of 2012, see Fontenele Reis (2012). 31
and programs relating to global warming and many other strategic world topics; on the other hand, it has enough mass and momentum to open up spaces, introduce viewpoints and enforce – in a positive manner – positions. Such immense asset and potential raise a subtle issue. Since 2009 at the Yekaterinburg meeting in Russia, the group’s actions have been articulated by such annual meetings. Work teams and several initiatives take place in each plenary meeting, but the efforts converge into the annual summit when the items in the previous agenda are reaffirmed, the progress made and their respective developments are announced, and new goals and guidelines are presented. I personally have nothing against such system. However, the development through which the agenda has been going slowly, but clearly, from an extremely flexible scheme to one with a growing density and complexity might demand a better elaboration and negotiation. Drawing on Carneiro Leão’s (2012) successful analysis, it can be said that the group’s little or almost no inclination towards inhouse negotiation that should end up implying significant individual concessions in favor of a unified positioning seems to be considerably less viable each time. This calls for – within the context of a bilateral agenda – more space for inclusion of the themes involving the agenda and BRICS’ developments. The growing level of sophistication of the several possible actions demands that bilateral stitches (I purposefully use this colloquial term), in addition to BRICS forums and work teams, are deepened, many times in an anticipated way or in a way that tests new entrepreneurships. At other occasions, it is done so as to reach a better fine tuning of the progress of certain ideas or projects, which will be decided at the pentagonal forum. 32
I am not naïve to say it does not occur at present, but the point is that the emphasis and priority given to such systematic and better structured stitches should increase. This would avoid surprise and rather embarrassing situations at the annual summits, in addition to improving the way in which to launch and develop joint efforts by highlighting the group’s coordination capacity. For Brazil and India, given both their connection to IBAS and the already established mechanisms for strategic dialogues, it would be easy to include this item in the common agenda. It would not be hard to extend it, each on its side, to the bilateral with three other members, based on this pilot experience. Within the context of a surprisingly dynamic world, other possibilities will come up. As Brazil has a privileged good relationship with the other four members, with which it has no territorial or strategic disputes, the country can be of great help as a mediator for issues that should be dealt with among the BRICS, and – in this aspect – it can be an invaluable friend for India. Conclusion
In the MahāBhārat – an immense and wealthy treasure of Indian culture – a dice match won through methods that are not exactly recommendable, surprisingly and radically changes the order of events. It is disconcerting – mainly from a Westerner’s perspective – how the defeated group of “heroes” reacts, and ends up conforming and living an apparently unfair and hard to accept and understand destiny. All the history will be conditioned by these developments. 33
It is particularly interesting to point that for a very keen observer of social facts like Max Weber, this epopee is at times deprived of logic and sounds strangely amoral. As a matter of fact, despite creative analyses of well-known passages in the text16, Weber (1921) seems to encounter difficulties in grasping the spirit of the wonderful piece of work by making a linear and moral analysis of the complex behaviour of one of the brilliant characters in the narrative, the Great Krishna/Vasudeva, a character who, according to him, “feels no shame in suggesting behaviours that seriously violate the principles of correction, faith and fidelity”! Penetrating the Indian mind is not an easy task for someone immersed in Western culture. It can be a frustrating, irritating, and at times doomed to failure, enterprise, for it demands an effort whose result becomes impossible to understand, or, at least, too exotic. Hence, the huge misunderstandings and regrettable disappointments. As I advocated at the beginning of this text – and shall stress – India demands at least that we know it minimally well, so that we can grasp its impressive wealth and understand its much more subtle and sophisticated than chaotic and illogical behaviour. Brazil also demands a due consideration of its spirit, which is disarmed, though not sloppy; easy-going, though not coward; informal, though not inattentive or blunt, joyful, though not irresponsible. 16. It is worth highlighting an interesting sociological interpretation of the precious dialogue between Arjun and Krishna, which is part of the Bhagavad Gītā, and another, maybe less well-known, which relates to “Draupadī’s complaint, a strong woman character, in the light of the conflict between ‘natural right’ and ‘eternal or divine right’. Bhagavad Gītā interpretation is naturally disputed by more spiritualized interpreters of the text, which, however, does not diminish the value of their perceptions. 34
Together, both countries make up a simply spectacular partnership, whose full realization, if unfulfilled, will mean an enormous loss for this miserable world that desperately needs creative, unusual and magic associations. *Professor at Escola de Pós-graduação em Economia (EPGE), Special Advisor of the President and Responsible for the Unidade de Inteligência Internacional (NPII) of the President’s Office; FGV, Rio de Janeiro.
[email protected]
References - CARNEIRO LEÃO, V. (2012). BRICS: identidade e agenda econômica – Notas de um observador diplomático, in O Brasil, os BRICS e a Agenda Internacional, by several authors. Brasília: FUNAG. - FLÔRES, R. G., Jr. (2013). International innovation and daring: the BRICS. Global Dialogue Review, vol.1, n.1. New Delhi. - FONTENELE REIS, M. E. (2012). BRICS: surgimento e evolução, in O Brasil, os BRICS e a Agenda Internacional, several authors. Brasília: FUNAG. - GANGULY, S. and PARDESI, M. S.. (2009). Explaining sixty years of India’s foreign policy. India Review, vol. 8, n.1: 4-19. - WEBWE, M. (1921). Gesammelte Aufsätze zur Religionssoziologie, Band II. Tübingen: Mohr. (as established in the Max Weber Gesamtausgabe, Band I/20, Tübingen, Mohr, directed by H. Schmidt-Glintzer).
35
Brazil-India Relations through the Lens of Political Economy Adriana Erthal Abdenur*
With the deep structural changes that have taken place within the international system with the end of the Cold War, new opportunities have emerged for developing countries located in distant parts of the world to cooperate and coordinate positions. This change is due not only to technological advances in communications and transport that can help stakeholders to overcome great distances, but also because of the relative flexibility of the post-US hegemonic era, as compared with the Cold War, permits more fluid political alignments. In addition, the partial decentering of the world economy has entailed the emergence of new hubs of economic growth outside of the old metropolis. The extent to which multipolarity has set in is still open to debate, but the decentering process has opened up new pathways and possibilities for South-South cooperation. Links between Brazil and India have deepened against this backdrop of deep structural change and growing uncertainty in the international arena. How has the changing world economy enabled and constrained ties between these two places, and to what extent have Brazil and India used their expanding maneuver space in the international arena to consolidate their ties? Adopting a political economy perspective, I analyze Brazil-India relations across time, from the colonial period through the post-Cold War era, so as to understand the varying degree of agency which these entities have enjoyed in relating to each other. While there was episodic interaction and some direct cooperation between the two countries until the end of the Cold War, these flows were restrained by underdevelopment as 36
well as by the low degree of autonomy of Brazil and India as political entities. Brazil-India ties began to deepen and diversify significantly only after the turn of the millennium, when the changing international system allowed for new modes of trans-continental cooperation to gear at lessening development dependency. The aim of the paper is not to provide a comprehensive account of Brazil-India relations — a task that would fall outside the scope of this brief paper — but rather to paint in broad strokes some of the key inflection points in Brazil and India’s capacity for direct interaction. The remainder of the paper thus traces their interaction historically, from colonial trade and contraband to current bilateral relations as well as involvement in international organizations, both established institutions such as the United Nations and Bretton Woods Institutions and looser coalitions like IBSA, BASIC, and BRICS. Political Economy of South-South Cooperation
The changing world system has linked different places across time through changing relations of power, including the creation of dependency of the periphery upon the core, often mediated by a semi-periphery (Wallerstein 1976, Santos 2000). By adopting a political economy perspective, relations between seemingly unrelated events, processes, and places can be discerned (Harvey 1993). However, political economy studies have tended to focus heavily on core-periphery relations, rather than on links between nodes outside the core. Within this scheme, Brazil and India may be viewed as having long occupied semi-peripheral positions within the modern world system — first as colonies, and later as large, regionally influential developing countries with reasonably diversified economies. Although most literature within IPE has 37
focused on how peripheries and semi-peripheries relate to the core — that is, North-South relations — the past decade has brought about a significant surge in ties between these semi-peripheries. The world system, far from static, has entailed changes both in terms of the location of the core - as cycles of accumulaton wax and wane - and with respect to the positions of peripheries and semi-peripheries, as demonstrated by the rise of the Asian Tigers (Amsden 2001). More recently, the economic growth experienced by China, incuding its procurement abroad of natural resources, has prompted new questions about the changing role of noncore economies, as well as the deepening ties among developing countries (Arrighi 2010, Mohan 2013). In turn, this restructuring calls for a new historiography of South-South relations. In the case of Brazil and India, it is necessary to understand why and how these two states have significantly deepened their ties over the past decade. This surge in cooperation can be explained through internal factors, such as their respective foreign policies, but also with reference to the changing configuration of the global economy. Contemporary Brazil and India both aspire to open up new opportunities and increase their influence abroad, both within and beyond their respective vicinities. As the tenth economy by nominal GDP (and third largest by purchasing power parity), the second most populous state and the most populous democracy, India has considerable influence within and outside its immediate vicinity. In addition, India has significant hard power — including nuclear weapons — and soft power that is enhanced by the widespread Indian diaspora. However, constraints include inefficient production, persistent social tensions, and significant regional contestation (Ganguly 2012). On the one hand, like India, Brazil is a large, complex democracy which, despite having limited hard power, possesses abundant natural 38
resources and has accumulated considerable soft power through its extensive South-South development cooperation. In addition, Brazil has the somewhat unusual credential of nearly 140 years of peace with neighboring countries. On the other hand, it features some of the world’s highest crime rates, including homicide, low levels of technological innovation, and lagging education and other public services. Although Brazil does not face rivalry from nuclear power neighbors, its regional leadership is contested by Argentina, Venezuela, and Chile, among others. Like India, it faces persistent poverty and sharp socioeconomic inequalities despite recent advances along both these fronts. Despite their considerable differences in historical trajectory, socioeconomic development models, cultural makeup, and political dynamics, both Brazil and India have each sought to forge more independent foreign policies vis-à-vis the advanced economies of the global core. Over the past decade, this search for greater autonomy has included significant efforts to enhance their respective South-South cooperation with other developing countries, namely through strategic partnerships with other rising powers. Brazil and India have also faced significant contestation by neighboring states, and thus generate tensions when they claim to represent their respective regions. However, this contestation has not prevented these countries from banding together through loose groupings such as IBSA and the BRICS, both of which lend greater weight to their calls for reform of the global governance architecture. These similarities and points of interaction provide the analytical basis for examining Brazil-India ties across time. Intra-Colonial Trade between Goa and Bahia
Links between the territories now known as Brazil and India date back to the colonial era, when exchanges between these places were 39
mediated through, and limited by Portugal’s mercantilist logic. The first known links began with the “great expeditions” undertaken by explorers either hailing from Portugal or sponsored by the Portuguese crown—voyages undertaken as part of the competitive urge to build vast networks of overseas colonies from which to extract wealth for the core and create exclusive markets. Even early on, the territories that would become Brazil and India were interlinked in the Portuguese imaginary of far-flung places. In 1500, Pedro Álvares Cabral, who carried out the first significant explorations of the northeastern coast of South America and claimed much of this territory for Portugal, was assigned by King Manuel I to lead an expedition to India meant to open up new spice trade routes by setting up an entrepot in Calicut. The letter written by the scribe Pero Vaz de Caminha describing the lands and people Cabral’s fleet encountered in South America mentions Calicut (present-day Kozhikode)17: For all that, the best fruit that could be gathered hence would be, it would seem, the salvation of these people. That should be the chief seed for Your Majesty to scatter here. It would be enough reason, even if this were only a stopping place on the voyage to Calicut.
Departing from Brazil in 1500 with a fleet of thirteen ships, Cabral crossed the South Atlantic and followed the route to India that Vasco da Gama had opened up by circumnavigating the Cape of Good Hope and sailed (Greenlee 1995). Cabral’s fleet, stocked with foodstuffs from the South American coast, successfully traded for spices in Cochin, thus 17. Letter from Pero Vaz de Caminha to Dom Manuel I, 1 May 1500. Author’s translation. 40
carrying out the first recorded gesture of trade between Brazil and India. Over the next three centuries, these far-flung territories were tenuously linked through Portuguese colonial rule, with direct links severely restricted by the mercantilist restrictions imposed upon inter-colonial trade. Portugal established the Estado da Índia (State of India), first based out of Cochin (present-day Kochi) and, after 1510, out of Goa, which became in essence the capital of Portugal’s Asian domain. Portugal also had several trade outposts elsewhere in India, including island enclaves in Daman and Diu, and it carried out commercial exchanges between these nodes and colonies elsewhere, as far as Brazil. All of these territories, as well as those in between, were collectively referred to as “Indies,” although the crown drew a distinction between Oriental and Occidental Indies. Over the next centuries, Brazil became a stopover for the flow of ships established by Portugal to maintain control of its distant colonies. Through this commerce, products such as porcelain and spices, textiles, gems, and crafts were brought from India to Brazil, mostly entering through the port of Salvador. Several species of plants, including mango, breadfruit, and bamboo, were also transported from Asia via India, and some of these were successfully introduced (Lapa 1982). In the opposite direction, Brazilian products taken to India included tobacco, drief beef, and shipping ropes. As Muhana (2003) notes, the limited historiography of inter-colonial trade makes it difficult to ascertain the true extent of these flows, since exchanges between Brazil and Goa were frequently carried out as contraband. Some individuals also traveled between these places, particularly Goa and Bahia, which played somewhat equivalent roles in the Portuguese mercantilist system as distant commercial hubs and funneling points for the extraction of wealth (Pimentel 41
2013). In addition to the navigators and soldiers conducting intracolonial trade, a small number of Brazilian bureaucrats and private entrepreneurs served in Portuguese India during the colonial period. Vasco Fernandes Coutinho, for instance, the donatário (owner and administrator) of the Espirito Santo captaincy in Brazil, had previously served in India, and Duarte Coelho, the first captain general of Pernambuco, had twice been sent by the Crown to India. In 1700, Maria Úrsula d’Abreu e Lencastro, a woman from a prominent Rio de Janeiro family, joined the Portuguese army in disguise and was sent to fight in India under the false name Baltasar do Couto Cardoso18. In addition, on several occasions the Portuguese crown — noting similar climates in Goa and Brazil — dispatched agricultural experts to work on projects elsewhere in its colonies. In 1690, for instance, two Goans traveled to Brazil to assist with the plantation of cinnamon and pepper, both brought from India. In 1751, more Goans voyaged to Brazil as part of the Naubande expedition, to help with the planting of palm trees as part of an ultimately unsuccessful project to produce palm liqueurs in Brazil. According to National Library documents, two of the Goans died in Brazil, and the others returned to India in 175319. Despite these documented exchanges, the flow of goods, people, and ideas between Brazil and India was restricted not only by great geographic distances, but also by the lack of autonomy of those territories within the colonial system. Even after Brazil was granted independence, in 1822, its incipient foreign policy was tightly linked 18. Ministério da Fazenda (n.d.) “Relações Brasil-Índia” Brasília. Online: http://www. receita.fazenda.gov.br/Memoria/administracao/curiosidades/RelacoesBrasilIndia.asp 19. Inventário dos Documentos Relativos ao Brasil Existentes no Arquivo de Marinha e Ultramar de Lisboa, organizado por Eduardo de Castro e Almeida, 1:10, 12, 17 e 46. 42
to that of Europe and later the United States, leaving limited room for interaction with colonies until the second half of the 20th century20. On the whole, therefore, direct exchanges between Brazil and India during this period were episodic, informal, and both mediated and restricted by the European metropolis. Brazil and India during the Cold War
It was only with the sharpening competition between the economic models promoted by the United States and the Soviet Union that Brazil and India, as sovereign states yet operating within the rigid configurations of the Cold War, began to interact more directly. Diplomatic ties between the two countries were first established in 1948, shortly after India’s independence and the traumatic events of the Partition. Although Brazil had been granted its own independence peacefully more than a century earlier, the two countries found themselves in similar positions in the post-War period. Economically, both remained, in part due to the lingering effects of colonialism, highly dependent on the advanced economies; Brazil had been an exporter of primary commodities since it first became a colony, and India had been transformed under British rule from a major exporter of processed goods, primarily textiles, into an importer of manufactures and exporter of primary materials. Politically, Brazil and India were also relegated to secondary status in the war’s aftermath. Although they had each supported Allied efforts in combat, both left out of the core group of countries that shaped the era’s international system, 20. One notable exception was the importation of Indian zebu cattle to Brazil. Starting in 1898, over 6,200 head of zebu cattle of Indian origin were imported by Minas Gerais cattleman Teófilo de Godoy. Around 80% of Brazil’s present cattle stock descend from those zebu. Source: Museu do Zebu, Parque Fernando Machado, Uberaba. 43
including the United Nations and the Bretton Woods institutions. Roosevelt promised Brazil a permanent seat at the UN Security Council, but the proposal was vetoed by the Soviet Union and the UK. As for India, although in 1942 it was among the original members of the United Nations as one of only four non-independent founders,21 it too was denied a permanent seat. Early Brazil-India relations were marked by differences over the Indian independence movement, especially with respect to Goa. After 1947, Portugal refused to give in to India’s request for it to relinquish control of its Indian enclaves. Just as Brazil formally supported Portugal’s continued control over the latter’s African colonies, it opposed Indian claims over Portugal’s enclaves until 1961, when it realized that the decline of Portugal would allow India to assume control of Goa by force. After the Indian army overwhelmed Portuguese resistance and assumed control of Goa and the other Portuguese enclaves, Brazil criticized India for violating international law (Stuenkel 2010). Brazil’s stance led to sharp disappointment by the Indian government, which — as a strong supporter of independence movements elsewhere in the developing world — had expected greater solidarity from a fellow former colony (Furtado 2010). The two countries’ positions with respect to the Cold War camps had both overlaps and divergences. On the one hand, Brazil’s democratic government attempted to pursue a more independent path in its foreign policy in the early 1960s, but the course was reversed after 1964, when a coup d’état installed a military regime that lasted for twenty-one years. This meant that, although Brazil often expressed solidarity with other developing countries (and, eventually, newly independent states), it was not a full member of the Non21. The other non-sovereign founding members were Belarus, the Phillipines, and Ukraine. 44
Aligned Movement, sending only observers. The Indian government, on the other hand pursued a Socialist orientation, with implications both in the political arena and in the economic sphere. Although officially India kept itself outside the East-West divide, it was among the leaders of the Non-Aligned Movement. In addition, the Indian government enjoyed military and ideological support from the Soviet Union. Moscow vetoed a UNSC resolution against India’s annexation of Goa, and it provided military assistance seen by Indian policy elites as particularly valuable given India’s border disputes with Pakistan and China. It was not until the 1970s that, under pressure caused by the oil crisis, Brazil began to seriously consider South-South cooperation as a serious complement or alternative to its ties to the North. As a result, unlike India — a founding member of the Non-Aligned Movement— Brazil contributed to South-South coordination primarily through the Group of 77 (G-77) and the struggle for a more just economic system through UNCTAD (Machado 2004). These multilateral platforms meant that Brazil and India — both of which placed considerable importance on multilateralism, especially via the United Nations — interacted on issues of global governance, but that this interaction was also rather dispersed through the broad coalitions. At times their positions on UN issues coincided, but convergences were seldom a result of bilateral coordination. There were also divergences in their development models that sometimes led to differing positions with respect to the international trade regime. On the one hand, from colonial times, Brazil’s economy has always depended heavily on the export of commodities, and its sharp inequalities in land tenure led to the formation of vast farms geared towards export-oriented monoculture. As a result, Brazil developed a keen interest in promoting free trade in agricultural 45
products. India’s agriculture, on the other hand, has been based on millions of small farms that produce crops mostly for domestic consumption, for which the Indian government has provided subsidies. Thus, Brazil and India’s positions on trade have not always coincided, especially on the issue of agricultural trade. A visit by Indian Prime Minister Indira Gandhi in 1968 was well received by Brazilians but did little to increase concrete exchanges between the two countries. In addition to their diverging economic models, there were considerable political differences. Economically, India’s goal of attaining near-autarky meant that it had limited interest in international trade and investment. In the meantime, Brazil’s rightwing regime used import substitution to nurture industrialization, and it avoided becoming too close to leftist governments. The closed nature of their economies helps to explain why trade and investment between the two countries was minimal during the Cold War, never breaking the $200 million mark. One area in which exchanges did occur was in science and engineering, with a number of Indian specialists collaborating with Brazilian counterparts on nuclear, space, and metallurgical research projects in Brazil. However, as Tripathy (2012) notes, this cooperation withered after India conducted its 1974 nuclear bomb test and Brazil caved in to US pressure to stop collaborating with Indian specialists. Nuclear weapons would continue to be a point of difference between the two states. India continued to resist the UN’s non proliferation agenda as discriminatory against developing countries. In contrast, although Brazil and Argentina engaged in a brief and limited nuclear arms race, their differences were eventually resolved peacefully, with both states voluntarily giving up their respective nuclear weapons programs. Even though their direct policy coordination was limited, both Brazil and India became active members within certain 46
debates at the UN, working to redress the imbalances of the system by drawing on active multilateralism. India was particularly active in the struggle against colonialism and apartheid; it was the first country to raise the issue of Apartheid at the United Nations. Like Brazil, it also worked towards redressing unfairness in global trade negotiations, although their strategies for redressing this imbalance did not always converge, in part due to different economic interests. Both Brazil and India played key roles in negotiating developing country positions on GATT, for instance opposing the inclusion of services within the agreement22. Within the security sphere, during the negotiations of the Nuclear Non-Proliferation Treaty, Brazil and India opposed what they perceived as the regime’s discriminatory stance towards developing countries. In general, however, the overarching ideological consideration of the Cold War and the continued dependence of the semi-periphery upon the core imposed significant constraints on South-South cooperation, both in terms of political alignments and with respect to economic exchanges. Brazil and India in the Post-Cold War Era
With the collapse of the end of the Cold War, both Brazil and India found themselves at first on uncertain footing. Brazil had experienced a burst economic growth during the late 1960s and early 1970s—the period known as the “Brazilian Miracle” years—but the oil shock of 1973 helped fuel high indebtedness, soaring inflation, and economic stagnation during the 1980s. The strengthened Bretton Woods institutions, called in to prevent further crisis, imposed new limits on Brazil’s autonomy. As a result, even as Brazil returned to 22. Guerreiro, Ramiro S (1985) “Depoimento” Rio de Janeiro: CPDOC, p 432. 47
democracy in the final decade of the Cold War, its policy elites were primarily concerned with achieving macroeconomic stability and meeting the requirements of structural adjustments, even as poverty persisted and inequalities sharpened. As for India, with the collapse of the Soviet Union it lost an important source of ideological and defense support. Like Brazil, India shifted gears economically, carrying out some reforms to partially liberalize the economy in the 1990s. Both countries also began to deepen ties to other important regional powers. In 1996, Fernando Henrique Cardoso became the first Brazilian head-of-state to visit India. In addition to this active presidential diplomacy, two factors facilitated the deepening of ties between the two countries. First, as part of the 1980s wave of globalization, major multinational companies began relocating low and medium technology manufacturing from relatively high-waged countries in the West and the Asian Tigers to lower wage countries in Asia, including India. Second, the dramatic growth of China’s economy, and the increasing internationalization of its own companies elsewhere in the developing world, showed that South-South cooperation could be about more than ideological solidarity. However, the search for new economic opportunities intersected with political considerations, including occasional divergences. After India’s May 1998 nuclear tests, Brazil aligned with a group of non-nuclear states, both developing and advanced, to demand an end to the nuclear activities carried out by India and Pakistan (who had followed up by conducting tests of its own) and to call for compliance with the objectives of the Non-Proliferation Treaty (Patti 2010). Despite such disagreements, after the turn of the millennium, both Brazil and India began to pursue South-South cooperation more consistently. This strategy entailed not only offering more 48
development cooperation to smaller countries within and beyond their vicinities, but also strengthening relations with other large developing countries, especially those that were vocal in calling for reform of global governance. When Workers Party candidate Luiz Inácio Lula da Silva was inaugurated as Brazil’s president, in 2003, South-South cooperation became even more salient within Brazilian foreign policy23. India — along with China, Russia, and South Africa — was cited within his inaugural speech among the new government’s priority partnerships. Head of state visits in both directions followed, as well as frequent high-level exchanges meant to reinforce bilateral agreements signed in cooperation areas including oil and gas, tourism, infrastructure, academic exchanges, and biotechnology (Ministry of Foreign Affairs 2013). Relations between Brazil and India have also expanded through their participation in loose coalitions created to coordinate positions and strategies among rising powers. Some of these, such as the G-20, bring together developing and advanced countries, whereas others prioritize strengthening ties among rising powers. Through the India Brazil South Africa Dialogue Forum (IBSA), founded in 2006, the member states have cooperated in areas such as science and technology, education, agriculture, health, and naval defense. The IBSA Fund for Alleviation of Poverty and Hunger has included funding for development projects in East Timor, Burundi, Vietnam, and Guinea-Bissau, among others24. Despite nearly annual meetings since 2006, in 2013 the initiative appeared to lose steam with the cancellation of that year’s summit, although the three heads 23. Presidência (2003) Discurso de posse, 1o mandato. Brasília, 1 January 2003. 24. UNDP (n.d.) “IBSA Fund: Overview of Development Impact” Online: http://tcdc2. undp.org/ibsa/ 49
of state, plus those of Russia and China, did continue the cycle of BRICS meetings. The BRICS, originally launched as the BRIC initiative but later expanded via the 2010 inclusion of South Africa, has magnified Brazil and India’s demands for changes in global governance. However, due to the presence of two authoritarian regimes, within the BRICS the democratic identity of Brazil and India, along with that of South Africa, tends to be dampened, as reflected in the grouping’s agenda — which, despite having broadened over the years to include more areas of potential coordination, leaves aside issues of internal democracy and human rights. In addition, the grouping’s strong discourse of respect for national sovereignty has led to greater alignment between Brazil and India within international debates about military interventionism, although there are differences in their stances: Brazil has openly expressed distaste for NATO’s expanded mandate, while India — which collaborates with the United States in anti-terrorism and anti-piracy efforts and has enjoyed some US backing for its nuclear power status — has maintained a more ambiguous relation with the US and NATO on international security issues. In development-related debates, while Brazil and India continue to butt heads on agricultural trade issues, they have found increasingly common ground on issues of intellectual property rights, especially as they pertain to the production of generic medications for diseases representing public health risks. Finally, despite China and Russia’s stated support for reform of the UN Security Council, to which both Brazil and India continue to aspire, the BRICS have been unable to find a common strategy for overhauling the organization. As a result, Brazil and India have cooperated more concretely on this issue outside of the BRICS. Namely, they have joined forces with Germany and Japan through the G-4, a loose coalition bringing together four states that aspire to a permanent seat at the UN 50
Security Council and that support each other’s positions, even as their bids are contested by their respective regional rivals. The flexibility of these coalitions has also permitted India and Brazil to band together on specific topics through different permutations of rising powers. For instance, since late 2008 the BASIC bloc (Brazil, South Africa, India, and China) has attempted to coordinate positions in climate change negotiations, at least in the sense of achieving a lowest common denominator position. Pooling their leverage, the four countries committed to act jointly at the Copenhagen climate summit, including the possibility of collectively walking out of the negotiations if their minimum requests went unmet. These interactions and greater political dialogue have helped to boost bilateral flows between Brazil and India. Bilateral trade reached USD$10.62 billion in 2012. India’s top exports to Brazil are diesel fuel, coal and other minerals, electrical equipment, cotton and yarns, and medicines, while Brazil’s exports to India include minerals and agricultural commodities, in addition to machine parts, airplanes, and gemstones. Although India and Mercosur signed a framework agreement in June 2003, with a preferential trade agreement entering into force in June 2009, it has produced only modest results so far25, and there are ongoing efforts to boost these flows, including through potential triangulation via IBSA and the South African Customs Union (SACU). A bilateral commission and chambers of commerce also work to boost exchanges between the two countries, including investments26. At the same time, the flow of goods and capital is 25. http://www.cni.org.br/portal/data/pages/FF808081314EB36201314F22625A7F72.htm 26. Brazilian companies have invested in automobiles, IT, mining, energy, biofuels, footwear sectors in India, while Indian companies have invested in such sectors as IT, Pharmaceutical, Energy, agri-business, mining, engineering/auto sectors. Indian firms investing in Brazil include software firm Wipro Technologies, which has set up a business process outsourcing centre in Curitiba to provide shared services to AmBev, the largest brewery in Latin America. 51
accompanied by a gradual increase in mutual cultural exposure and intellectual exchanges, including through increased collaboration among Brazilian and Indian academics, think tanks, NGOs, universities. This interaction is limited due to the small size of Indian diaspora communities in Brazil and vice versa, but the internet and government policies such as scholarships for study abroad provide more direct linkages between Brazilian and Indian populations. Conclusion
The roles and positions occupied by Brazil and India within the world economy have changed across time, and with systemic transformations their agency — including in terms of relating to one another as semi-peripheries located on opposite sides of the planet — has also varied. During the colonial period, direct ties were mediated by the global core, especially via the Portuguese network of colonies and former colonies. During the Cold War, Brazil and India, as two formally sovereign states, found more opportunities to interact politically as well as economically, but these exchanges were limited by their underdevelopment and by the East-West divide, even as both countries sought a degree of autonomy vis-à-vis the two camps. It was only with the end of the Cold War, and specifically with the decline of US hegemony, that Brazil and India have found greater space for, and interest in, direct cooperation. This deepening interaction has taken place both through bilateral means and via multilateral platforms, and it has diversified across the political, economic, and cultural dimensions. However, the degree of agency that these states possess in pursuing South-South cooperation, including with each other, should not be overstated. Their links face limitations not only because of their 52
persistent domestic challenges — compounded, over the past few years, significantly slowdown in both economie s— but also by their regional priorities and by the external resistance that both continue to encounter in their efforts to become global players. In addition, surging South-South cooperation between Brazil and India takes place within a context of increasing competition among rising powers, particularly with the dramatic rise of China, whose overtures in Latin America —including Brazil — have expanded significantly over the past decade. Overcoming these hurdles so as to enhance Brazil-India cooperation will entail not only greater political willingness on both sides, but also deeper knowledge of the constraints and opportunities generated by the changing world economy. *Instituto de Relações Internacionais, PUC-Rio / BRICS Policy Center
References - AMSDEN, Alice (2001). The Rise of the Rest: Challenges to the West from Late-industrializing Economies. Oxford: Oxford University Press. - ARRIGHI, Giovanni (2010). Adam Smith in Beijing: Lineages of the Twentieth-First Century. London: Verso. - FURTADO, Rafael Arruda (2008). Relações Brasil-Índia (1947-1964): a descolonização dos enclaves portugueses in 147 Masters Thesis in History of International Relations. Brasília: Universidade de Brasília. - GANGULY, Sumit (2012). Think Again: India’s Rise in Foreign Policy July 5, 2012. - GREENLEE, William Brooks (1995). The voyage of Pedro Álvares Cabral to Brazil and India: from contemporary documents and narratives. New Delhi: J. Jetley. - LAPA, José Roberto Amaral (1982). O antigo sistema colonial. São Paulo: Brasiliense. 53
- MACHADO, Vera Barrouin (2004). Brasil-Índia: parceria em consolidação, pp. 229-249 in Amaral Jr., Alberto & Sanchez, Michelle Ratton. Relações Sul-Sul: países da Ásia e o Brasil. São Paulo: Aduaneiras. - MINISTRY OF FOREING AFFAIRS (2013). India-Brazil Relations, New Dehi, February 2013. Online: www.mea.gov.in - MOHAN, Giles (2013). Beyond the Enclave: Towards a Critical Political Economy of China and Africa, Development and Change 44:6, 1255-1272. - MUHANA, Adma (2003). Brasil: Índia occidental in Revista USP 57, pp. 38-49. - PATTI, Carlo (2010). Brazil and the nuclear issues in the years of the Luiz Inácio Lula da Silva government (2003-2010) in Revista Brasileira de Política Internacional 53:2, 178-195. - PIMENTEL, José Vicente (2013). Relações Intracoloniais Goa-Bahia 1675-1825. Brasília: FUNAG. - SANTOS, Teotonio dos (2000). A Teoria da Dependência: Balanço e Perspectivas. Ed Civilização Brasileira. - STUENKEL, Oliver (2010). The Case for Stronger Brazil-India Relations in The Indian Foreign Affairs Journal 5:3, 290-304. - TRIPATHY, Amitava (2012). India-Brazil Strategic Engagement: Possibilities for the Future in Indian Foreign Affairs Journal 7:2, 206-217. - WALLERSTEIN, Immanuel (1976). The Modern World-System: Capitalist Agriculture and the Origins of the European Worl-Economy in the Sixteenth Century. New York: Academic Press.
54
Perspectives on Brazil-India Commerce Leane Cornet Naidin*27
The role played by developing countries as relevant actors in the international trade scenario and in the globalized economic agenda raises a series of issues on the trade relations among them, as well as the role played by trade in these countries’ foreign policies. This paper presents a panorama of Brazil and India’s commercial relations and their positioning in the preferential trade negotiations scenario. The Mercosul-India trade preference agreement is the only commercial agreement in place among BRICS countries and serves as a basis for a reflection upon the possibilities of strengthening such cooperation. There is currently a wide range of trade negotiations going on in the world that reveals the different impacts of preferential trade agreements on these countries’ international positioning. BRICS plans to achieve greater leadership internationally raise issues on the position reserved to trade liberalization agreements within this project as well as their role in these countries’ international positioning. In the current world market with greater fragmentation of production in complex networks of global offers, the preferential trade agenda demands a comprehensive reflection that goes beyond tariff liberalization. As a matter of fact, there is a process in motion that has been changing the agenda of trade policies. The latest years have witnessed a quest for a geographical restructuring of world trade. This context reveals the emergence 27. This working paper is based on research findings by BPC, in collaboration with Thauan Santos, collaborator in this paper. See BPC-BRICS Policy Center, Policy Brief, A Geografia dos Acordos Preferenciais de Comércio do BRICS, February 2013. http://bricspolicycenter.org/homolog 55
of new trade negotiations and the speeding up of processes that had already been initiated. This process reanimated the debate over the thesis according to which trade relations follow the “hub and spoke” pattern – with the USA and Western Europe in the centre of the debate. With this perception in mind, BRICS countries aim at changing this pattern. Such project allows us to question the existence of trade agreements negotiation “strategies” by these countries. The first section of this article presents the world context of negotiation involving preferential trade agreements; the second describes Brazil’s and India’s initiatives in the trade agreement arena; the third presents the main characteristics of the commercial flow between these countries, as well as the scope of the ongoing agreement between India and Mercosul. The fourth and final section draws a conclusion and raises some issues involving the debate over the perspectives on the strengthening of commercial cooperation between these countries. The world scenario and current debate
The history of negotiation of preferential trade agreements by the World Trade Organization (WTO) member countries reveals two significant trends in international trade relations, which have longterm implications for the multilateral trade system: (i) The continuous growth of preferential trade agreements. According to research carried out by the WTO, in the last two decades, the number of negotiated agreements has increased fourfold. In 2010 there were 300 ongoing agreements, including those that were notified 56
and those which were not notified to the organization28. This process tends to retrieve part of the agenda that had been “lost” or put aside in the Doha stalled multilateral negotiations29; and (ii) The idea that the content of preferential agreements is going through an ongoing deepening process, which reflects important changes in world economy, as the growing regionalization of trade relations by means of global production chains and incorporation of “new themes” into preferential trade agreements – as rules for environment-related policies, bid terms, government purchases, social clauses and investments, as well as the deepening of service liberalization30. Thus, negotiation of preferential agreements is motivated by a search for gains that respond to the changes in international productive structure31.
Thus, the current scenario of increased global fragmentation of production accelerates the process of negotiation of new regulatory landmarks, whose balance is negotiated between commercial partners, so as to allow interdependence among actors/companies of each nation, and to enable “new themes” 28. WTO – World Trade Organization. The WTO and preferential trade agreements: From co-existence to coherence. In: World Trade Report 2011. Geneva, 2011, p. 3. Available in: . 29. HADDAD, M.; HOEKMAN, B. Taking places: international integration after the crisis. In: Canuto, O.; Giugale, M. (Ed.). The day after tomorrow: a handbook on the future of economic policy in developing world. Washington: World Bank, 2010. p. 67-84. 30. SANCHEZ BADIN, M. R. A Regulação de “Novos Temas” em Acordos Preferenciais de Comércio Celebrados por União Europeia, Estados Unidos, China e Índia: pontos relevantes para o Brasil. Instituto de Pesquisa Econômica Aplicada – IPEA, 2012a, p.8 (Text for Discussion, n. 1.773). 31. Ver: . 57
to be incorporated that have been taking on greater importance in recent negotiations. These initiatives have already been pointed out in WTO and OECD reports, which show how global production chains have been accelerating and deepening the scope of trade negotiations, as good governance pertinent areas to commerce and investment are more relevant in this scenario than mere tariff liberalization32. Brazil and India in the geography of commercial agreements
Among the BRICS countries, Brazil has only one ongoing agreement, with India33. It is an agreement whose scope is limited to the trade of goods, with a negotiation landmark in fixed preferences and is, above all, characterized by the concession of preferences by Brazil for products on which very low MFN tariffs apply.34 Besides, no explicit commitments have been made in relation to the announced future stages of the integration. The same can be said about the deepening of preferences or the broadening of the scope of the agreement. Bilateral agreements involving the Mercosul only choose as partners other developing countries or less developed countries from other continents, like Mexico, the Andean Community, Israel, 32. OECD-WTO. OECD-WTO Database on Trade in Value-Added: preliminary results. OECD-WTO, Geneva, 2013. 33. THORSTENSEN, V; ELEOTÉRIO, B. Acordos Preferenciais de Comércio. In: THORSTENSEN, V; OLIVEIRA, I. T. M. Os BRICS na OMC: políticas comerciais comparadas de Brasil, Rússia, Índia e África do Sul, IPEA, 2012, p.323-330. 34. CONFERDERAÇÃO NACIONAL DA INDÚSTRIA – CNI. As relações comerciais do Brasil com a Índia e a África do Sul. Comércio Exterior em Perspectiva. Ano 14, nº.8/9, maio/junho, 2005. 58
Turkey, Syria, SACU, Palestine and Egypt – the four latter are not in place yet. They correspond to just a small share of Brazilian trade and reveal the incorporation of agreements into a political agenda focused on the deepening of South-South relations, with little emphasis on a commercial agenda. With respect to new themes, Brazil has reacted in all forums to moves involving issues like services, investments, government purchases and environment35, as well as the social clause36. Most Brazilian negotiated agreements have within their scope only the liberalization of trade of goods. Although there are agreements that incorporate into their general landmark themes such as investments (Israel), physical infrastructure (Mercosul-CAN) and services, there is no evidence of an actual commitment related to liberalization of service and investment flows, which are increasingly related with the trade of goods in the world scenario. Moreover, there has been no established schedule for the implementation of the announced goals. In other words, there is a perceived important political aspect in the regionalization of these agreements, which follows a SouthSouth trade partner diversification logic, without great strengthening of commitments for liberalization of flow of goods, services or investments, notwithstanding the ambitious target of the general landmark of these agreements. On the other hand, India’s perspective on trade agreements negotiation is quite distinct. Though the majority of its agreements are concentrated in the Asian continent, the country’s 35. KANAS, V.; NASSER, S.; LIMA, R. Meio ambiente. In: THORSTENSEN, V.; JANK, M. (Org.). O Brasil e os grandes temas do comércio internacional. São Paulo: Aduaneiras, 2005. p. 241-271. 36. SANCHEZ BADIN, M. R. Compromissos assumidos por grandes e médias economias em acordos preferenciais de comércio: o contraponto entre União Europeia e Estados Unidos e China e Índia. Instituto de Pesquisa Econômica Aplicada – IPEA, 2012b. (Text for Discussion, n. 1.700), p.105. 59
negotiated trade agreements reveal a broad variety in terms of regional partners, distributed across Asia, Africa, Latin America and Europe, with special emphasis to Asia and the Pacific Trade Agreement, of which China is also a member country, in addition to the Mercosul agreement and the one made with the Austral Africa, Russia and China’s Customs Union37. Other agreements under negotiation include countries like Australia, Canada, Indonesia, New Zealand and the EU. There are talks for eventual agreements with Israel and Russia 38. A great deal of ongoing agreements corresponds to free-trade and partial-scope agreements focused on the trade of goods (except for Thailand, which includes services and investments). Thus, despite the partners’ diverse nature, it is worth mentioning that neither India nor Brazil have made any commitment with respect to the “new themes”, mostly involving environmental themes, labor issues and government purchases. However, India has made efforts towards the liberalization of the service sector, in relation to which the country has some comparative advantages in some segments. As a matter of fact, market diversification is a goal that has been ratified by the Indian government as one of the main response strategies to 2009 crisis39. Mostly with regard to Asian countries, preferential trade agreements signed by India have aimed at establishing production chains among regional countries40, a tendency that has been mapping the geography of commerce among them. Thus, 37. See http://www.aric.adb.org/fta.php?id=132&ssid=3&title=People’s%20Republic%20of%20 China-India%20Regional%20Trading%20Arrangement 38. See Ratton (2011). 39. GOVERNMENT OF INDIA. Government of India Ministry of Commerce and Industry Department of Commerce. Gazette of India Extraordinary, 2009. 40. See Baumann & Ng (2012). 60
the country’s trade negotiation strategy seems to follow Asian companies growth strategies, which become incorporated into longterm strategic alliances and involve partners engaged in regional production chains, of which most final goods are destined to the rest of the world. Trade flows and the MERCOSUL-India agreement
Although they have presented growth since 2005-2007, in the 2011-2013 period Brazilian exports to India accounted for only 1,6% of the country’s total export volume. The main destination countries were the EU-27 (20,2% total), China (17,8%) and the USA (10,5%). Such concentration pattern is similar as concerns the origin of our foreign purchases, of which 21,3% originated in the 2011-2013 period from the UE-27, 15,1% from China, and 15,0% from the USA (Tables 1 and 2). Table 1. Brazilian Exports – Destination countries (%)
Countries
2005-2007
2008-2010
2011-2013
UE-27
23,7%
22,5%
20,2%
China
6,2%
12,3%
17,8%
United States of America
17,5%
11,4%
10,5%
Mercosul*
10,3%
11,0%
10,2%
Japan
2,8%
3,2%
3,4%
India
0,7%
1,5%
1,6%
Others
38,7%
38,1%
36,4%
Source: author’s own elaboration based on a TradeMap; * Argentina, Paraguay and Uruguay. Ordering based on decreasing triennial average 2011-2013
61
Table 2. Brazilian Imports – Originating Countries (%)
Countries
2005-2007
2008-2010
2011-2013
UE-27
22,8%
21,5%
21,0%
China
9,1%
12,8%
15,1%
EUA
16,3%
15,2%
15,0%
Mercosul
9,7%
9,3%
8,4%
Korea, Republic of
3,1%
3,9%
4,2%
Nigeria
4,1%
3,6%
3,8%
India
1,7%
2,1%
2,5%
Others
33,2%
31,6%
30,0%
Source: author’s own elaboration based on TradeMap; * Argentina, Paraguay and Uruguay Ordering based on decreasing triennial average 2011-2013
It is worth noting that most part of our exports to India is made up by fuels and lubricants, followed by minerals and certain primary products. Our imports are also concentrated on fuels, mineral and chemical products, followed by certain machinery and textile products (Tables 3 and 4).
62
Table 3. Brazilian Exports – Products Exported to India (%)
Products
2005-2007 2008-2010 2011-2013
Mineral fuels, oils, distillation products, etc
8,5%
26,9%
56,5%
Ores, slag and ash
16,1%
10,7%
9,7%
Sugars and sugar confectionery
8,5%
31,2%
8,9%
Animal, vegetable fats and oils, cleavage products, etc
16,3%
5,1%
6,5%
Iron and steel
7,0%
6,6%
4,2%
Machinery, nuclear reactors, boilers, etc
8,4%
3,7%
2,3%
Aircraft, spacecraft, and parts thereof
7,9%
0,7%
1,9%
Source: author’s own elaboration based on TradeMap; * Argentina, Paraguay and Uruguay, Ordering based on decreasing triennial average 2011-2013
Table 4. Brazilian Imports – Products imported from India (%)
Products
2005-2007 2008-2010 2011-2012*
Mineral fuels, oils, distillation products, etc
52,2%
47,9%
55,7%
Organic chemicals
9,0%
6,0%
5,4%
Machinery, nuclear reactors, boilers, etc
3,7%
6,0%
4,5%
Miscellaneous chemical products
3,3%
3,2%
4,0%
Man made filaments
4,0%
5,1%
3,8%
Electrical, electronic equipment
2,7%
2,3%
2,6%
Vehicles other than railway, tramway
0,9%
2,7%
2,4%
Others
24,2%
26,9%
21,6%
Source: author’s own elaboration based on TradeMap; * No data for 2013 Ordering based on decreasing triennial average 2011-2012 63
As refers to the trade flow from India to Brazil, there is also a perceived focus on Europe and the United States’ destination and originating markets, also with emphasis to the Arab Emirates, stimulated by regional proximity (Tables 5 and 6). Among the products exported by India to Brazil, as seen above, there is a high concentration on oil derivatives and chemical products (around 66% of the total – Table 4), in addition to certain equipment and middle products for the textile and clothing sectors. In other words, the volume of trade between these countries has little significance and diversification if we consider the potential for growth, given the size of their economies. Table 5. Indian Exports – Destination Countries (%)
Countries
2005-2007
2008-2010
2011-2012*
UE-27
21,8%
20,2%
17,5%
United Arab Emirates
9,3%
12,4%
12,4%
USA
15,1%
11,1%
11,9%
China
6,7%
6,5%
5,3%
Singapore
4,9%
4,3%
4,9%
Hong Kong
4,0%
4,0%
4,1%
Brazil
1,2%
1,5%
2,0%
Others
37,0%
39,9%
42,0%
Source: author’s own elaboration based on TradeMap; * No data for 2013 Ordering based on decreasing triennial average 2011-2012
64
Table 6. Indian Imports – Originating Countries (%)
Countries
2005-2007
2008-2010
2011-2012*
EU-27
15,8%
13,4%
11,5%
China
9,4%
11,1%
11,5%
United Arab Emirates
4,5%
7,5%
7,7%
Saudi Arabia
5,4%
6,2%
6,4%
Switzerland
4,8%
4,9%
6,3%
USA
6,3%
6,4%
4,9%
Iraq
1,8%
2,4%
3,9%
Brazil
0,5%
0,8%
1,0%
Others
51,6%
47,3%
46,8%
Source: author’s own elaboration based on TradeMap; * No data for 2013 Ordering based on decreasing triennial average 2011-2012
As mentioned previously, the Mercosul-India agreement is the only ongoing agreement negotiated by Brazil among the BRICS countries. It reflects one of the recent trends in Brazilian commercial policy, i.e., economic and political strengthening of dialogue among developing countries, the so-called “South-South dialogue”. The negotiated agreement constitutes an instrument for exchange of fixed trade preferences, applied to a limited amount of products, without any indication of strengthening of the negotiated trade liberalization. Three preference levels were established, from 10%, 20% and 100%. Although the agreement text mentions it is the first stage of a developing project towards a free-commerce zone, in fact there is no indication of commitment or goals in this respect. Both countries maintain a trade policy with relatively high import tariffs and the political economy explains the trend favoring local production in both countries, which has not allowed 65
considerable improvements of any liberalization initiative. As we have seen, neither one of the two countries is among their respective main trade partners, a position reserved to developed countries (USA and EU) and China. As the data in Tables 8 and 9 indicate, the commitment for liberalization by both countries has been modest, with most part of the effort being concentrated on less significant tariff reductions. It is noteworthy that India has not consolidated the bulk of its import tariffs at the WTO, which implies it is free to go back on the trade liberalization process – in this aspect, the negotiation of a preferential agreement guarantees, at least, the granted preferences. As refers to India’s offer to the Mercosul, a complete preferential liberalization (i.e., preference margins to Mercosul of 100%) was granted to less than 5% of the negotiated products, and low preferences were granted to around 90% of the total negotiated products, which accounted for almost all export volume for Mercosul in 2002/2003 (period when the Agreement was negotiated). According to CNI evaluation41, this reduced liberalization was implemented for products whose current import tariffs were very high, as is the case of crude soy oil, silk, pumps for liquids and medical and veterinary instruments. It is worth highlighting that among the products to which a complete liberalization was offered, there are electronic products on which India already applies a zero tariff, as the country has adhered to the WTO Information Technology Agreement – in other words, no preferential concession was offered to the Mercosul in trade practices. Obviously, such result seriously restricts the agreement’s capacity to accelerate the Mercosul or Brazil’s exports to the Indian market. 41. CONFEDERAÇÃO NACIONAL DA INDÚSTRIA – CNI, op. cit. 66
Table 8. India’s offer
Preference Margin (%)
Number of items
Average tariff
10
93
90,94
20
336
37,04
100
21
3,13
Total
450
-
Source: author’s own elaboration based on MDIC; CNI (Comércio Exterior em Perspectiva, 2005)
Table 9. Brazil’s offer (Mercosul)
Preference margin (%)
Number of items
CET* Average
10
394
5,27
20
45
7,50
100
13
0,00
Total
452
-
Source: author’s own elaboration based on MDIC; *Common External Tariff (Comércio Exterior em Perspectiva, 2005)
The preferential access to export markets offered by the Mercosul to India was not distinct: a mere liberalization of 100% in less than 3% of the negotiated products, the great majority of which had only 10% for products that, in Brazil’s case, would have a great potential for intraindustrial trade growth with India: organic chemical products, machinery and mechanical tools, as well as fuels and mineral oils. It is also worth mentioning that the Agreement included a safeguard clause, based on the WTO Safeguard Agreement, which allows signatory countries to go back on the negotiated 67
liberalization process in the circumstances foreseen in the clause. Among them, withdrawal is foreseen in cases of surge of imports, which could mean the invalidation of the very essence of the agreed liberalization. The limited nature of the scope of the bilateral negotiation is striking, if we consider the general pattern that applies to tariff policies in both Brazil and India. As can be seen in Tables 10, 11 and 12 below, in both countries the average trade protection levels are considerably high. Given that in both Brazil and India the gap between the import tariff levels applied and consolidated at the WTO is still considerably high, it is expected that the negotiated preferences, though still reduced, can offer some bilateral guarantee that the tariffs on negotiated products will not be raised again, and that the preferences obtained will be enough for maintaining preferential trade between the countries. It is worth stressing that there seems to be a significant intraindustrial trade potential between the Indian and the Brazilian economies, particularly in the manufactured products sector, even though, as previously mentioned, the trade protection policy thwarts this potential. Table 10. India’s import tariffs
Indicator
Years
Aggregated average tariff Applied MFN average tariff 2012
Total
Agricultural Non-Agricultural products products
48,6
113,1
34,5
13,7
33,5
10,4
Weighted average tariff
2011
7,7
48,4
6,1
Imports (in US$ billion)
2011
476,5
17,7
458,8
Source: World Tariff Profiles (WTO, 2013) 68
Table 11. Brazil’s import tariffs
Indicator
Agricultural products
Non-Agricultural products
31,4
35,4
30,8
Years Total
Aggregated average tariff Applied MFN average tariff
2012
13,5
10,1
14,1
Weighted average tariff
2011
10,2
12,0
10,1
Imports (in US$ billion)
2011 224,0
10,9
213,1
Source: World Tariff Profiles (WTO, 2013)
69
70
5,6
Nonagricultural products
2,6
5,3
I 3,3
I
14,3 11,5
6,5
B
0
