Trade and Development: The rising importance of sustainable development in the trade agenda of Brazil

Brazil has traditionally been amongst the most ardent critics of the attempt to link labor, social and environmental issues to the commerce and investment agendas in trade negotiations. The official position of Brazil has maintained notable continuity through governments of differing political orientation. Despite this, due to links established in the international arena, diverse economic and social actors in Brazil routinely deal with issues of sustainable development in their agendas of trade, investment and financing. This study tries to identify the channels through which themes of sustainable development "enter" the international economic agenda of Brazil, as well as to "map" some emergent trends in the relation between trade and sustainable development issues that can come to have significant impacts on Brazil's negotiating interests.

This country report is part of a joint TKN-CINDES research project comprising of four national case studies - in addition to Brazil, Argentina, Chile and Peru were also studied - undertaken to identify, within the thematic areas of environmental and labor regulation, the most important issues for each country in terms of opportunity and/or vulnerability, as well as the forces that prompted the introduction of sustainable development topics into the country's trade and investment agendas. The other individual country studies, as well as a synthesis report summarizing the main findings for the region as a whole, are also available through the Trade Knowledge Network website.

Key points:

• Recent trends in the world economy and the increased international insertion of Brazil tend to increase pressure over Brazilian companies and the government to participate in international negotiations that link trade and environment (including climate change) and social issues. Moreover, the proliferation of unilateral measures by governments from developed countries and requirements imposed by consumers and importers, related to social and/or environmental standards, increasingly impose costs of adaptation on Brazilian companies.

• In recent years, the link between trade and sustainable development has become relevant for agro-industrial sectors. The expansion of Brazilian agribusiness and the deforestation of the Amazon - phenomenon that is responsible for about two thirds of the carbon emissions in Brazil - turn diverse agro-industrial sectors of the country into privileged targets of public and private initiatives in the countries of the North. These initiatives seek to define applicable standards to the products and methods of production throughout the value chain.

• Unlike the 1990s, when the trade dimension was the most important channel through which sustainable issues entered Brazilian businesses' international agenda, in this decade, this linkage has occurred through international investments of transnational companies (Brazilian or foreign-owned), or, in the case of companies of open capital, through the financing of investments. Brazilian companies' foreign direct investment directed to Africa and South American countries have, for the most part, environmental impacts, as they are concentrated in the natural resource sectors, as well as social impacts, since they come into contact with indigenous communities.

• The agenda of sustainable development has gained political and institutional density in Brazil also as a result of the evolution of the domestic environment - and not only due to Brazil's links to the world. An autonomous political arena around the subjects of sustainable development has consolidated in Brazil. For the majority of the organized sectors of society, these are not seen anymore as "subjects of the North" but have been appropriated by social groups and domestic economic interests and have been translated into private initiatives and public policies.

Key recommendations:

• The refusal of the developing countries in discussing sustainable development issues in the multilateral negotiations transferred them to the agendas of regional and bilateral commercial negotiations. This does not mean that countries like Brazil have managed to definitely eliminate these subjects from trade agreements. Rather, considering the proliferation of regulations, requirements and unilateral certification of a social, environmental or climatic change nature, it may be in the interest of some Brazilian sectors that these subjects are dealt with under the umbrella the WTO in order to guarantee clear rules and the effective participation of all the interested parties.

• A program of research on the impacts of sustainable development concerns on the trade and investment agenda of Brazil must privilege questions that tend to gain greater relevance, such as the multiplication, in the developed countries, of new instruments to deal with non-trade concerns and the emergence of the subjects of "food security" and "energy security" in the agendas of important players in the international trade and the multilateral organisms.