|
 Brazil's international trade policies and strategies
must improve dramatically, especially where high-tech,
big ticket items are concerned, there are no shoulders to cry on
and it will be dog eat dog for the most part. So if Brazil wants
to play with the big boys, it will have to look and act like one.
By Adhemar Altieri
A bit of "disclosure" is required before the start of this column. For a
while, I considered staying away from this issue. The reader might understand why I felt
this way: about half my living days were spent in Canada, the other half in Brazil, with a
handful of years in-between in the U.S. In Canada I completed most of my education and
learned my trade, which I now practice in Brazil where I live with my Canadian wife and
Canadian-born, bi-cultural, dual citizenship-carrying children. My family has been
described as an authentic "Brascan" by a handful of Brazilian and Canadian
acquaintances, who actually know that the "bras" in that venerable Canadian
company name comes from Brazil, and the "can" from Canada. As I found myself
constantly shaking my head at so many questionable developments involving Brazil and
Canada, I suppose my deep roots in the two countries got the better of me… I suspect
I see things in a way that only the few who are intimate with both countries are able to.
So, here goes…
Ignorance, it seems, is always a lot more dangerous than those who suffer from it
realize. Being unaware or misinformed, the ignorant tend not to understand or care about
the consequences of their possibly misguided deeds—they simply don't know any
better…
But what if ignorance is only a façade or excuse, and questionable acts not a
consequence of lack of knowledge? And what if governments decide to behave that way,
confident that most of their people—the constituencies they must answer to—will
not identify the true nature of what they're doing? In other words, what if it's
intentional and not always misinformed… what do we have then?
Seems in that case, we have the current status of relations between Brazil and
Canada—two countries with far more in common than either appear comfortable with for
some strange reason, and an inherent difficulty in recent years when it comes to dealing
productively with one another at the government level. As a consequence, what is most
obvious when Brazil-Canada relations are analyzed is the wasted potential for increased
trade and other exchanges both might enjoy, should more enlightened approaches and open
minds on both sides ever prevail.
To most observers, the current trouble between the two countries began about five years
ago, with the start of the subsidy dispute involving aircraft manufacturers Embraer, from
Brazil, and Bombardier, from Canada. Last year, the battle moved upstairs, no longer a
tiff between companies: the two governments have taken over, which is questionable in
itself given how successful and competitive both companies are. Good pro-market
capitalists that they are, Embraer and Bombardier should duke it out without governments
getting involved, and certainly without hurting entrepreneurs and consumers in both
countries in the process—and ultimately harming bilateral relations.
But there's a lot more to it than a squabble between aircraft makers that got out of
hand. The real kick-off in terms of bilateral ignorance came in the early '90s when two
Canadians were jailed in Brazil for their part in the kidnapping of Brazilian supermarket
tycoon Abílio Diniz, owner of the Pão de Açúcar chain. The issue simply wasn't worth
the effort it drew from diplomats in both countries over several years, primarily because
of strong lobbying in Canada backed by the family of Christine Lamont, one of the
convicted Canadians—the other, her boyfriend, was Brian Spencer.
Canada's early response was actually perfect. After the Canadian media reacted by
questioning the validity of the guilty verdict against the two Canadians (nothing wrong
there, Brazilians frequently question their own Judiciary as well, and for good reason),
Ottawa sent legal specialists to Brazil to investigate the proceedings, and the evidence
used to convict the pair. When they returned and submitted their findings, then-External
Affairs Minister Barbara McDougall said in an interview with Canada's top-ranked
television network, CTV, that Canada was satisfied that all was in order. And she added a
phrase that should have put an end to it all: Canadians can't travel abroad, break laws
and expect the government to come to the rescue…
There was good reason for McDougall to say this at the time. Canadian media outlets had
researched how many Canadians were being held in prisons around the world, and wondered
out loud: if Ottawa was going to try and bring home two convicted kidnappers jailed in
Brazil, what kind of precedent would that set, and wouldn't all other jailed Canadians
around the world, guilty or not, be entitled to the same treatment? So at first, it seemed
the Canadian government wanted no part of trying to answer those questions. But things
gradually changed, as the Lamont family brought out its heavy lobbying artillery.
It reached a point where Canadian diplomats stationed in Brazil made direct contact
with Brazilian legislators to push for the pair's release, in a way that came dangerously
close to being interpreted as outside interference. So this is where things really began
to get sour and uncomfortable between the governments of Brazil and Canada. Many in
Brasília found it hard to believe that Canada would exert so much pressure on behalf of
Lamont and Spencer, while far more productive trade matters were brushed aside. The couple
were eventually allowed to fly home to serve out their sentences, even though kidnapping
is considered a heinous crime in Brazil.
That whole incident is often rehashed in the Brazilian media, with Canada always cast
in a questionable light. This is happening even more frequently now, as an unthinkable
common thread is identified between the release of two kidnappers and the
Embraer-Bombardier dispute. In both cases, the Canadian government moved decisively on
behalf of very specific interests. A frequent comment heard from business leaders in
Brazil recently goes something like "we had no idea Bombardier had so much pull in
Ottawa." A few years ago, similar questions were being asked about the Lamont
family's ability to get Canadian diplomacy to privilege their convicted daughter's cause.
In the minds of Brazilians, all that was visible was a government from the
"civilized" part of the world, working hard to free a pair of criminals.
As it turns out, Brazilians really had no idea how much pull Bombardier could muster,
until the Canadian government imposed a dubious ban on Brazilian beef, based on a flimsy
suspicion, not supported by any significant scientific argument, that mad cow disease had
made its way into the Brazilian herd. The past week saw the demoralizing withdrawal of
that ban by Canada, but only after the U.S.—which never really bought the idea that a
problem existed in Brazil in the first place, moved before Canada to lift the ban. Because
of NAFTA commitments, the U.S. and Mexico had reluctantly joined Canada when the ban was
first announced.
With each disappointing incident between Brazil and Canada in recent years, Ottawa
dealt with Brazil in misinformed, condescending, "I don't care what you think"
fashion. There was also an apparent certainty that public opinion back home wouldn't
really be a problem, almost like betting few people would care. And Brazil responded in
kind, seriously mishandling each event, and counting on domestic ignorance about Canada as
well: obviously a place filled with igloos, polar bears and not much else Brazil should
care about...
Brazil, for example, allowed the case involving the two Canadian kidnappers to be
depicted as a humanitarian problem, or even a case of political persecution, with help
from the always-opportunistic Brazilian left wing which openly clamored for repatriation
of the two Canadians, and seven other convicted kidnappers. Brazil refused to deal with
the request as it should have, rejecting any notion of repatriation and upholding its own
laws against people who commit a crime inside its borders, regardless of their origin.
Brazil also played the case differently, depending on the audience: internally, Brazil
chose the poor little Third World nation role, under pressure from the industrialized bad
guys again. Externally, it was far too accommodating, waiting as it did for an opportunity
to release the kidnappers as Canada wanted, while suffering the least possible internal
damage before a still outraged Brazilian public.
The Brazilian approach to the Embraer-Bombardier battle has been equally misguided, not
designed for long-term success. Brazil says it "can't win one" at the World
Trade Organization because the rules were made by rich countries, to benefit rich
countries. If this is so, given that the dispute between the plane makers is five years
old, it's high time Brazil came up with more than the usual discourse, and showed the
world precisely how it is that WTO rules—to which Brazil is a signatory—hurt
developing nations. Brazil should also push for full disclosure from Canada regarding its
support for Bombardier, since anything that happens under the much-maligned ProEx program
used by Brazil to subsidize Embraer is quite public, unlike secretive Canada Account
transactions.
The bottom line is that Brazil's international trade policies and strategies must
improve dramatically, and go beyond waiting for sympathetic eyes to show approval whenever
a problem arises. Especially where high-tech, big ticket items are concerned, there are no
shoulders to cry on and it will be dog eat dog for the most part, so if Brazil wants to
play with the big boys, it will have to look and act like one. While whining and crying
foul will not do the trick, well-researched, professional diplomatic actions will,
especially if they clearly expose what's wrong with the way the other side is behaving,
when that happens to be the case. It's a choice between turning pro and joining the big
leagues, or stepping aside.
The most recent incident, involving Brazilian beef, was perhaps the most blatant
display of ignorance—intentional or otherwise—on the part of both countries.
Hardly ever before have Canadian government officials acted in so decidedly un-Canadian
fashion, gagging and punishing experts who disagreed with the ban, writing threatening
letters to those with "offending" viewpoints, and offering a defense for their
actions that borders on laughable. Ottawa can argue until the entire cabinet is blue in
the face that its decision to ban Brazilian beef was strictly a health issue: it has not,
and will not, convince the rest of the world, or even Canadian public opinion. There's far
too much out there that says otherwise.
A simple, factual example: technically, the recent trip to Brazil by NAFTA experts,
supposedly to "inspect" packing plants, farms and labs, was really a useless
exercise, at best designed to attach some seriousness to the Canada-led ban. Both
governments knew this, the experts involved knew this, and the media eventually saw it for
what it was, when it was explained that no meat packer in Brazil can become an exporter
unless it is inspected by officials from the country it exports to at least once a year.
In other words, the facilities visited by experts from Canada, the U.S. and Mexico, who
all tried to look very curious, had been inspected by U.S. and Canadian officials not that
long ago—there was really nothing new to be discovered or uncovered. Skeptics might
also consider what a straightforward answer to this question might be: would Canada have
imposed a similar, potentially very harmful ban in terms of trade, without the common
courtesy of prior notice, and based on circumstantial, unscientific data, if another
country was involved—perhaps a Western European country which doesn't manufacture
competitive regional aircraft? Obviously and most certainly not.
Again, Brazil was guilty on all counts in the beef exchange as well. First, by
downplaying the fact that forms sent by Canada two years before, requesting information on
measures against mad cow disease, were not sent back. Agriculture Ministry officials
looked quite foolish stating they had no idea where these forms were. This detail actually
highlights a cultural clash: while the matter of the unreturned forms would be "no
big deal" to a Brazilian government official—they routinely blow deadlines and
misplace forms and important documents, as any Brazilian taxpayer or entrepreneur can
attest to—it would be almost unpardonable behavior to a Canadian official. The two
governments definitely function by different standards, and surely, in this exchange, both
sides lacked a better knowledge of how the other does business.
Although the barbecue-protests that took place in Brazil, featuring Mounties in clown
noses and the odd cow delivery to Canadian diplomatic offices, were small and good-natured
for the most part, Brasília was wrong again when it pushed to turn this into an
anti-Canada tidal wave. It was an underhanded attitude on Brazil's part to encourage the
pseudo-nationalistic flag waving and whisky-dumping for the cameras: while that went on in
Brazil, Canadian consumer groups openly questioned why consumers might have to pay higher
prices, for products that would have to be imported in substitution of Brazilian goods
affected by a looming Brazil-Canada trade war. That was a far more mature approach, which
put the Embraer-Bombardier debate in its rightful place, which ought to be anywhere but
harming others involved in Brazil-Canada trade. Again, Brazil chose to play victim and
tell the world "here we are being harmed again," rather than defending its views
with solid, practical arguments.
What is it, then, that allows ignorance to prevail when major, or uncomfortable issues,
are on the table between the governments of Brazil and Canada? First, both countries, and
not just their governments now, are guilty of a widespread lack of awareness about the
other. A Canadian media colleague, who has spent time in Brazil, was rather blunt when I
recently asked to what extent he thought ignorance explained the way Canada has behaved
when dealing with Brazil. "To most Canadians, everything south of Texas is about the
same: poor, backward, problematic," he said. In the minds of most Canadians, that
makes Brazil about the same as Belize. That's if the Canadian in question happens to know
where Belize is...
Brazilians have a slightly better idea of what Canada is about and where it's
located—the fact that about 10,000 Brazilians live in Canada, compared to about 2,500
Canadians in Brazil, might have a bit to do with that. On the street though, most
Brazilians are unlikely to name a prominent Canadian or a Canadian product—although
now they might think of the whisky they saw being dumped on television. They might also
remember singer Alanis Morrissette, since a number of radio stations announced they would
not be playing her music because of the beef ban. Until that happened, most Brazilians
thought Morrissette was American, as is often the case with Canadian music stars who gain
prominence in Brazil and other parts of the world…
What a small percentage of Brazilians and Canadians—mainly government officials
and businesspeople—tend to remember about each other, is that the two countries have
very similar GDPs. This becomes an unexpected source of friction, again based on
ignorance. Some Brazilians believe Canada is not really that big a deal, perhaps even a
pushover, if its GDP is about the same as Brazil's. That reaction actually is a result of
the unwarranted, low self-esteem that afflicts most Brazilians: in their minds, if Brazil
has "caught up" to some other country, there is no merit for Brazil, only
weakness on the part of the other country. Meanwhile, some Canadians feel uncomfortable
about a poor, problematic and backward Belize-like nation from somewhere south of Texas
that matches Canada in terms of GDP, and wants to sell airplanes to boot. How
presumptuous… And of course, as they concentrate on the overall figure, both sides
forget that while Canada's GDP is spread over 30 million people, Brazil's must support 170
million…
The fact remains that both Brazil and Canada are big losers for not having a better
handle on each other. The two countries are complementary in many ways, and there are
several positive private sector experiences, mostly involving Canadian investments in
Brazil—especially in telecommunications: Nortel, Bell Canada and others are major
players. There are also Brazilian investments in Canada, the highlight being steel giant
Gerdau's pair of mills in Ontario and Manitoba. Improved Brazil-Canada relations would
present an excellent opportunity for both countries to further diversify their
international trade, a much more urgent need in Canada's case since 85 percent of Canadian
exports go to the United States. This might even contribute to reduce all the talk about
the "Americanization" of Canada, a trend supported by recent studies that show
most Canadians not terribly concerned about becoming Americans in the future. A nation,
especially one like Canada, is a terrible thing to waste.
Even amid tense moments between Brazil and Canada, like the events surrounding the
recent beef ban, there are positives worth mentioning that seem to escape both sides.
During the recent visit by NAFTA inspectors because of the beef ban, Brazilian officials
thought they pulled a fast one by forcing the visitors to use Embraer planes to get around
in Brazil. They probably didn't realize that Embraer turbo-props were equipped with Pratt
& Whitney engines, made in Canada. Because of that, for years airplane engines were
near the top of Canada's list of exports to Brazil. Proof positive that even when it comes
to aircraft, Brazil and Canada can compete and also cooperate. A little more civility and
less ignorance by both sides is all it takes. Otherwise, both should give up any talk of
an Americas-wide free trade zone, as obviously neither is prepared for so bold an
undertaking.
Related sites:
Bombardier
http://www.bombardier.com
Embraer
http://www.embraer.com
Nortel Brazil
http://www.nortelnetworks.com/corporate/global/cala/brazil
Gerdau Steel—Canadian operations
http://www.canadiansteel.ca/members/gerdau_courtice_steel_inc.html
http://www.canadiansteel.ca/members/gerdau_mrm_steel_inc.html
Brazil-Canada "Trade War" section created on the website of Brazil's most
prestigious daily newspaper, O Estado de S. Paulo
(Portuguese only)
http://www.estadao.com.br/ext/brasilcanada
Adhemar Altieri is a veteran with major news outlets in Brazil, Canada
and the United States. He holds a Master's Degree in Journalism from Northwestern
University in Evanston, Illinois, and spent ten years with CBS News reporting from Canada
and Brazil. Altieri is a member of the Virtual Intelligence Community, formed by The
Greenfield Consulting Group to identify future trends for Latin America. He is also the
editor of InfoBrazil (http://www.infobrazil.com),
an English-language weekly e-zine with analysis and opinions on Brazilian politics and
economy. You can reach the author at editors@infobrazil.com
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