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The Americas In Transition: The Contours of Regionalism, by Gordon Mace, Louis Bélanger, and contributors
7. Brazil’s Alternative Vision
Is Brazil an exceptional case within the Americas? Throughout much of its history as an independent state, Brazil cultivated a special alliance with the United States and turned its back on the rest of Latin America. Negotiations to create a hemispheric free trade area have raised possibilities for change in the practice and foundations of Brazil’s foreign policy. However, as in any process of economic integration, aside from its depth and degree of formalization, the exercise is marked by uncertainty. At stake are issues affecting society as a whole and affecting it in an uneven fashion. This uncertainty precludes any definitive conclusions as to the outcome of the process under way. However, the manner in which it has unfolded to date is suggestive of the limits and possibilities of regional foreign policy within the novel context of hemispheric regionalism.
In this chapter I focus on Brazilian foreign policy in relation to the process of hemispheric regionalism presently under way. In the first section I summarize the history of Brazil’s efforts at regional cooperation and its relations with the United States. In the second I describe the current strategy for hemispheric regionalism. In the third I analyze the rationale for Brazil’s current strategy. In the final section I discuss the limits and possibilities of Brazilian strategy and its consequences for the future of continental regionalism.
Brazilian Regional Cooperation and Relations with the United States: Historical Background
Historically, two distinct regionalist perspectives coexisted in the Americas: the Western Hemisphere Idea incarnating the U.S. vision of a regional system, which is examined by Gordon Mace in Chapter 2 of this volume, and the Bolivarian Vision, which sought to integrate the continent without U.S. participation. After its independence from Portugal in 1822, Brazil expressed only mild interest in these two models of Pan-Americanism. Not only was the Brazilian monarchy’s foreign policy oriented toward Europe during the nineteenth century, but Brazil’s system of government was at variance with the republican standard enshrined in the rest of Latin America.
Under the republic, Brazil’s foreign policy orientation shifted away from close relations with England to a new emphasis on ties with the United States. First conceived as a paradigm during Baron Rio Branco’s term as minister of foreign affairs (1902–1912), the special alliance with the United States endured, with some variations in emphasis, into the early 1960s. Intended as a pragmatic means to defend Brazil’s regional and world interests, this special relationship was predicated on the acceptance of the United States as a global hegemonic power in the Western Hemisphere and a focal point for Brazilian foreign policy. The United States was seen as a tacit ally that would enhance Brazil’s bargaining power vis-à-vis its Hispanic neighbors.
Since the late 1960s, Brazil’s relations with the United States and the Latin American countries have been influenced by economic and political variables. Politically, the size of the Brazilian economy compared with those of other countries in the region has been an inhibiting factor for regional cooperation. Hispanic countries perceived a potential threat in Brazil’s massive geoeconomic dimensions, and Brazil’s own elites seemed to sustain the belief that the country was destined to have its own independent future.
Economic factors also influenced the decision to abandon special relations with the United States when Brazil’s military regime undertook its great power project in the 1970s. The expansion of industrial capacity, diversification of foreign economic relations, and the pursuit of military objectives such as the development of an indigenous armaments industry and the quest for self-sufficiency in sensitive technologies were the major motivations for Brazil’s foreign policy reorientation in the 1970s. Nuclear nonproliferation, trade issues, population control, environmental protection, human rights violations, territorial waters, North-South issues, and nuclear energy figured among the more contentious items on its bilateral agenda with the United States during the 1970s.
The military nature of the Brazilian political regime also influenced Brazil’s outlook on regional cooperation. Following the 1964 military coup, which marked Brazil’s renewed participation in the hemispheric security system, Brazil came to be viewed by other Latin American countries as the region’s subimperialist power and the preferential ally of the United States. Although Washington had initially welcomed Brazil’s military regime, changes in U.S. foreign policy priorities ushered in by the Carter administration, which was manifestly concerned with human rights and nuclear nonproliferation, were matched by a more assertive Brazilian foreign policy. This led to changes in U.S. attitudes toward Brazil. Delinking domestic politics from foreign affairs, which were to be conducted according to a new globalist orientation, Brazil’s military regime sought to explore a European option for the acquisition of sensitive technologies and as a market for raw materials and commodities exports. It also decided to target Latin America and Africa as potential customers for Brazilian manufactured products and approach the Middle East with an eye toward guaranteeing its oil supplies.
Brazil’s transition from military to civilian rule and its increasing international economic vulnerability in the mid-1980s led to a change in this globalist orientation. Cooperation with the countries of the Southern Cone became a priority in Brazilian foreign policy after the 1986 Economic Integration and Cooperation Program with Argentina, which was followed by the creation of the Southern Cone Common Market (Mercosur) in 1991. 1 In addition, awareness of the growing costs of policy conflict with Washington led diplomatic, political, and business elites to a relative consensus on the undesirability of a permanent negative agenda with the United States. Brazilian authorities have sought to restore more positive relations by readjusting policies on economic and industrial issues such as trade liberalization, privatization, economic deregulation, computer technology, and intellectual property rights, as well as security matters and, last but not least, such global issues as human rights, nuclear nonproliferation, and the environment. Brazil, unlike Argentina, has not gone so far as to push for a sort of peripheral partnership with the United States. However, good relations with Washington have became a priority for the Fernando Henrique Cardoso administration, particularly since Brazil achieved economic stabilization. Although the desire to limit damages was important in fueling these initiatives, foreign policy priorities—chiefly Brazil’s aspiration to obtain a permanent seat on the UN Security Council—also played a role.
In any case, Brazil’s regional cooperation and relations with the United States now involve a much more diverse set of domestic actors representing new societal pressures and transnational alliances. Although the foreign ministry is responsible for conducting Brazil’s external relations, economic liberalization and civilian rule have tended to expand the scope of the actors concerned, and international postures have become less homogeneous as a result (Hirst and Soares de Lima 1994). At the same time, internal convergence between foreign policy interests and domestic economic and political interests have tended to increase Brazil’s bargaining power in international negotiations. Such convergence is present in the current debate over hemispheric regionalism.
Brazil’s Current Strategy Toward Hemispheric Regionalism
As Gordon Mace notes in Chapter 2, the current U.S.-led project for hemispheric regionalism retains certain similarities to the original Western Hemisphere Idea. The same cannot be said for existing subregional experiments, which not only differ among themselves but also lack the political component of latinidad contained in the erstwhile Bolivarian Vision. However, with the renewed U.S. hemispheric initiative launched at the Miami summit, distinct positions reflecting divergent national interests in the United States and Brazil/Mercosur have begun to emerge.
Despite these differences, there is also a clear convergence between current arrangements. The subregional experiments share the logic of economic liberalization with the hemispheric proposal, a departure from state-led, inward-oriented models. A certain consensus also exists between the region’s government and business elites, for whom the failure of Latin America’s previous development model spawned the conditions for the new regionalism. However, this apparent similarity in viewpoints is not necessarily a precursor to the convergence and eventual disappearance of subregional arrangements and the subsequent hegemony of the hemispheric proposal under U.S. leadership. Indeed, this outcome represents everything Brazil would rather avoid. It is for this reason that negotiations between the United States and Brazil/Mercosur—the second largest subregional arrangement after the North American Free Trade Agreement (NAFTA)—constitute the most significant process for the definition of the course of regionalism in the Americas.
Brazilian strategy regarding regionalism in the Americas has been guided by two main principles: (1) a strong preference for multilateralism over regionalism on account of fairly diversified markets—notably, the relative importance of U.S., Latin American, and European Union involvement in Brazilian trade and investment—and concerns about possible trade deviations resulting from a regionalistic strategy; and (2) a preference for subregional integration—namely Mercosur—over any U.S.-led hemispheric arrangement. 2
Brazil’s preference for multilateralism, its decision to maintain policymaking autonomy in economic affairs, and the sheer volume of its economy in comparison with its Mercosur partners resulted in a number of unilateral economic policy steps that have bred resentment among other Mercosur member states. Nevertheless, Brazil’s marked preference for Mercosur over a hemispheric arrangement has led to a positive linkage between processes at the subregional and hemispheric levels. Every U.S. move aimed at deepening or intensifying the hemispheric experiment has resulted in the reinforcement of Brazil’s commitment to Mercosur and greater emphasis on cooperative strategies designed to replace unilateral ones. This pattern was set with the genesis of the Mercosur project itself, which can be viewed as a response to the anticipated effects of NAFTA on the Southern Cone economies. Brazil explicitly pursued foreign policy initiatives in view of strengthening regional cooperation after George Bush announced the Enterprise for the Americas Initiative. Brazil’s efforts led to an institutional solution geared toward ensuring a unified Mercosur position, a solution that took the shape of a bilateral agreement between the United States and Mercosur known as the 4+1 Agreement (Nunes Amorim 1991).
Since 1994, when the Clinton administration once again set hemispheric integration as a priority, Brazil has reiterated similar concerns about the Free Trade Area of the Americas (FTAA), especially since FTAA negotiations happened to coincide with Bill Clinton’s failure to secure fast-track authority from Congress to speed Chile’s proposed adhesion to NAFTA.
Brazil’s foreign policy actors tend to fear Argentina’s opportunistic behavior each time the United States makes positive gestures toward hemispheric integration. Such behavior on Argentina’s part is viewed as weakening the Argentinean commitment to Mercosur, thereby decreasing Brazil’s bargaining power in hemispheric negotiations. At the same time, given that regionalism has not been an economic priority for Brazil, its diplomats are unable to avoid the fallout from unilateral economic policy decisions affecting regional partners. Economic policy, foreign as well as domestic, is not only set but also executed by the Ministry for the Economy and the Central Bank. Brazil’s Ministry of Foreign Relations plays only a marginal role in this area, as does the Ministry for Industry and Commerce (MIC), which is sensitive to the interests of industrial sectors. The Ministry of Foreign Relations has led regional cooperation initiatives since their inception in the form of the Brazil-Argentina Economic Integration and Cooperation Program in the mid-1980s. More recently, the Ministry for Industry and Commerce has taken on a more active role as economic considerations become increasingly important in Southern Cone cooperation.
The foreign ministry still plays a significant role in conducting regional and trade negotiations. This role is enhanced by the MIC’s lack of international experience, which can be attributed to the nature of Brazil’s economy, which was relatively closed until quite recently. When positions converge, as they have with the FTAA, the influence and bargaining power of the foreign office are strengthened within the governmental decisionmaking apparatus. Unlike the Ministry for Industry and Commerce, the foreign ministry is an agency with few domestic clienteles. It is further removed from the business world than the more protectionist MIC, which has traditionally maintained close ties with industrial interests. Protectionist inclinations at the foreign ministry not only are weaker than they have been in the past but also tend to be motivated by ideology when they do manifest themselves. When an occasional protectionist policy decision conflicts with Brazil’s obligations before the World Trade Organization (WTO), or when such policies give rise to problems with Mercosur partners—as was the case with recent trade restrictions on automobile imports—the foreign ministry tends to be less protectionist than the MIC. In such instances, the foreign ministry is more than likely to find allies within the Ministry for the Economy. Despite their fears of possible mercantilist and protectionist effects, Ministry for the Economy officials favor economic liberalization and regionalism because they help open up the Brazilian economy.
Brazil’s strategy on hemispheric regionalism has remained virtually unchanged since President Bush announced the Enterprise for the Americas Initiative. At the time, two objectives were perceived as crucial: preventing Argentina’s defection and guaranteeing a unified position among the four Mercosur partners—Brazil, Argentina, Uruguay, and Paraguay—to enhance bargaining power vis-à-vis Washington. Later, when proposals for the creation of a hemispheric free trade area were mooted—and especially after the establishment of NAFTA—it became clear that Brazil’s position differed from that of most other countries in the region. Unlike its neighbors, Brazil did not envision Mercosur as a step in the direction of hemispheric integration.
Prior to the launch of the FTAA initiative in 1994, discussion in Brazil centered on the advantages and disadvantages of joining NAFTA. Brazilian diplomats, scholars, politicians, civil servants, and businesspeople tended to stress the disadvantages of such an arrangement. From an economic standpoint, they argued that Brazil should prioritize negotiations with Mercosur and other blocs such as the European Union, Brazil’s largest trade partner. The idea was that Brazil should give priority to the consolidation of the subregional arrangement, a strategy that would leave it in a stronger bargaining position in future negotiations. In light of the multifaceted character of Brazil’s integration in the global economy, they also raised arguments against the supposed inevitability of eventual membership in some of the existing megablocs along with questions about the liabilities Brazil would incur in joining regionalist initiatives.
From a political standpoint, these same sources argued that NAFTA membership would have the following negative effects on Brazilian interests: a considerable reduction in foreign policy autonomy on international initiatives that could affect U.S. interests; a drastic decrease in policymaking freedom on such contentious bilateral issues as intellectual property, services and investments, environmental protection, science and technology, and macroeconomic policy; and, finally, in light of the absence of institutional arrangements within the hemispheric integration model of the time, an asymmetric bargaining position favorable to the United States (Departamento de Integração Latino-Americana/MRE 1993).
The main difference between then and now is the change in tone in bilateral relations. In contrast to President Fernando Henrique Cardoso’s current government, the Itamar Franco regime (1992–1994) saw relations with the United States hit their lowest point of the decade. The deteriorating relationship was marked in particular by the failure of U.S. policymakers to grasp the reasons for Brazil’s reluctance to follow the example of other Latin American countries that were taking drastic measures to achieve economic stabilization and full political compliance with nuclear nonproliferation regimes. With the advent of economic stabilization under the Cardoso administration, bilateral relations shifted significantly. The Economic Stabilization Plan, or Real Plan, was implemented in three successive phases starting in June 1993 with the launching of a new currency—the real—in July 1994. Aiming to control inflation, it consisted of a monetary reform anchored in a stable exchange rate and efforts to reach fiscal equilibrium; to speed up privatization of state enterprises; to control domestic demand by means of high interest rates; and to keep prices low with trade liberalization. Not only did the Real Plan prove effective in eliminating a critical inflationary situation, but the Cardoso administration was also able to pursue successfully the economic reforms it had set for itself. 3
The government also sought to reduce bilateral tensions, especially in the areas of intellectual property and sensitive technologies. It joined the Missile Technology Control Regime and, in mid-1997, announced its adhesion to the Nuclear Nonproliferation Treaty. In the theater of regional foreign policy, the project for the creation of a South American Free Trade Association (SAFTA) was shelved, at least in the form envisioned by the preceding administration. An irritant to the bilateral relationship, the original SAFTA project was viewed by the United States as a demonstration of Brazil’s tendency to overestimate its international leverage.
It is curious that, in spite of the aforementioned changes in foreign policy, Brazil’s posture in relation to hemispheric integration has remained unaltered. Changes in strategy may have occurred, not least in reaction to a process outside of Brazil’s control, but the country’s basic position has not shifted from the one set forth during the 1990s, when hemispheric integration became part of the Brazilian agenda for economic diplomacy. The fate of SAFTA provides a telling sign of the continuity of regional policies. The shelving of the political initiative to create a South American free trade area marked the beginning of the northward expansion of Mercosur, with the adhesion of Chile, Bolivia, and Venezuela. Likewise, the Mercosur–European Union framework agreement aimed outright at “maintaining equilibrium in the Americas” (Almeida-Medeiros 1995).
The main change in foreign policy was the assessment in official Brazilian circles that the FTAA process would prove largely irreversible provided the United States could muster the political will to see it through. At the Summit of the Americas in 1994, Brazil therefore agreed to work toward the creation of a hemispheric free trade area by the year 2005. This reversed an earlier and recurring attitude that the United States had perceived as a strategy to avoid negotiations and the concessions that would have to be made. Underlying Brazil’s acceptance was the recognition that any attempts to obstruct the process at the time would leave it isolated. In practice, however, the strategy for negotiations has been to attempt to stall as much as possible the actual onset of tariff and nontariff negotiations.
From the Brazilian standpoint, uncertainty about the ability of the U.S. executive branch to move forward on the FTAA centers on the U.S. Congress, as evidenced by the White House’s difficulties in obtaining congressional ratification for NAFTA and congressional refusal to grant fast-track authority for NAFTA expansion. Brazilian policymakers see U.S. congressional resistance as a factor that weakens Washington’s negotiating position because, in the absence of fast-track authority, there are no assurances that official agreements entered into by international players will in fact be implemented. 4 It is curious that the erosion of Washington’s bargaining capacity has been accompanied by a hardening of its negotiating stance in favor of a swifter and more encompassing timetable that fails to take existing integration initiatives into account. As a result, differences between the two countries’ negotiating positions have become more visible and have favored Brazilian leadership by allowing for the agglutination of divergent positions.
Brazil’s position differs from that set forth in the U.S. proposal on such issues as a timetable, the level of commitment, the format, and the scope of an agreement. Brazil’s preference is for slower integration, with tariff reductions to begin in 2005. It has outlined a three-phase negotiation process: The first phase, extending until 2000, would basically consist of business facilitation measures, or measures designed to reduce transaction costs to economic agents; the second, to take place between 2001 and 2002, would deal with issues such as harmonizing rules and disciplines, the elimination of unjustified nontariff measures, and the definition of a dispute settlement mechanism; the third, to last until 2005, would cover market access, including liberalization of the service sector. 5
Brazil favors negotiating the FTAA as a single undertaking using a building block methodology based on negotiations between blocs. The United States, for its part, prefers country-to-country negotiations, which effectively inverse the order of priority for the issues to be negotiated. Whereas Brazil/Mercosur favors initiating negotiations on such issues as agricultural subsidies, dispute settlement, and technical norms, the United States has prioritized issues such as market access for goods and services, intellectual property, and government procurement—issues that in the Brazilian view ought to be taken up at the end of the negotiations. In addition to promoting a swifter negotiating process, the United States has stated that it would like its priority issues settled by 2000. Generally speaking, the United States favors a “most comprehensive” agreement approach that would establish FTAA disciplinary norms along NAFTA lines, whereas the Mercosur proposal excludes such U.S. agenda items as environmental and labor relations standards (Abreu 1997).
Brazil’s strategy in delaying the FTAA for as long as possible—or at least in pressing for a slower pace in negotiations—is eminently pragmatic. It seeks to gain time to complete its own market-oriented reforms first. This would allow it to upgrade its own industrial base and enhance its competitiveness in preparation for a vast, FTAA-scale trade liberalization without incurring major internal costs. The economic arguments invoked by Brazil to defer priority on the FTAA are similar to those raised in the past: The sheer volume of the Brazilian economy, in contrast with that of its smaller neighbors, would tend to flatten the benefits accruing from integration into a free trade zone. Moreover, given the diversification of its trade relations, it would be advisable for Brazil to stick to its policies of economic openness and extend eventual trade concessions to all partners rather than cast its lot with a regionally preferential agreement such as the FTAA. Politically, Brazil disagrees with the U.S. proposal casting the FTAA as an extension of NAFTA, a prospect that would entail setting disciplinary rules and standards for tariff and nontariff barriers at levels both more comprehensive and more restrictive than the prevailing WTO standards to which Brazil currently adheres.
Aside from the fundamental continuity in Brazilian strategy, what is particularly noteworthy is the consensus among diplomats, scholars, policymakers, the business community, and opinion leaders regarding Brazil’s official position on FTAA negotiations. In a departure from past practice, Brazilian foreign policymakers have explicitly delinked bilateral Brazil-U.S. relations from regional negotiations. The prevailing orientation regarding bilateral relations is to develop a positive agenda with the United States despite differences over the FTAA. Although divergences with the United States are almost always politically charged, policymakers have sought to minimize differences so as not to enlarge the scope of conflict. 6 And unlike the situation prior to FTAA, Brazil’s negotiating stance has become more consistent since it gained the support of its business community. Brazil has thus been able to buttress its diplomatic arguments with the concrete backing of private interests. This has proved to be a considerable asset at the bargaining table because in the past the United States regularly alleged that Brazilian foreign policy positions were based on ideological principles rather than on the concrete interests of the business sector.
Business interests in the most competitive sectors aside, Brazilian industrialists who support Brazil’s negotiating position would rather play for time so as to shore up their affairs within Mercosur and adjust to the pressures of a more open market. Market access as well as nontariff barriers have been the issues most likely to mobilize the business community. Exporters are especially concerned with slow growth in exports to the United States, and they single out restrictions to access in sectors like steel as examples of U.S. trade policy outgrowths devised in reaction to Brazil’s alleged dumping and export subsidy practices. In fact, the most immediate FTAA benefits for broad sectors of the Brazilian export community would be to minimize U.S. protectionism and promote the reasonable harmonization of industrial and incentives policies. Nevertheless, the prevailing consensus is that a more deliberate pace in establishing this arrangement would buy the time these sectors require to be able to compete on equal terms with their counterparts, particularly those in the United States and Canada. As for the already competitive producers in the agricultural sector, they stand to benefit directly from the FTAA because they are significantly penalized by U.S. protectionist practices. 7
The same divergences observable between governments have been echoed in discussions between various national business communities. Just as Mercosur businesses, led by Brazil, prefer a gradual pace for negotiations, their Canadian, U.S., and Mexican counterparts would rather speed up the establishment of the FTAA and concurrent negotiations on all related topics. When the Business Forum failed to reach a consensus on these issues, the report drafted for assessment by the Ministries for Trade at the Belo Horizonte ministerial meeting in May 1997 ended up voicing both positions (“Divergências” 1997).
Although the Business Forum was convened as part of official FTAA negotiations, the creation of a similar mechanism for labor unions was rejected by certain participating governments, although the Brazilian foreign ministry supported the participation of organized labor in an effort to expand its domestic base of political support. As a result, labor union participation in the debate on FTAA negotiations has been considerably limited. Labor unions have been especially fearful of the FTAA, which they associate with a process of economic globalization that is likely to aggravate problems of unemployment and social exclusion. Moreover, for union leaders, the sharp social and economic disparities between the North and the rest of the Americas will not only make it difficult to reach a fair and balanced agreement but also prevent competition on equal terms. In addition, the exclusion of workers from the decisionmaking process is seen as an “absence of democracy” that will diminish the legitimacy of the decisions made (“Sindicatos” 1997; “Sindicalistas” 1997).
In their assessment of the U.S. negotiating position, Brazilian negotiators stress offensive and defensive elements. In offensive terms, the FTAA would amount to an extension of U.S. trade policy, albeit with a lesser degree of unilateralism, in the sense that it aims to establish de facto liberalization of trade, services, and investments in the region. In defensive terms, the United States would view Mercosur growth and its agreements with other entities such as the European Union as harmful to U.S. interests and the consolidation of bilateral agreements between blocs or countries on the South American continent as a threat to its primacy in the area. North American scholars agree with this assessment and have argued that the Clinton administration’s focus on U.S. domestic issues has left the United States effectively absent from a region that currently constitutes one of the world’s most promising emerging markets, particularly in the case of the southern republics. It is interesting that both U.S. and Brazilian observers attribute each other with self-interested economic objectives. Generally speaking, government elites in Brazil view NAFTA and the FTAA as mercantilist strategies devised by the United States in order to pursue its own economic interests. Among the informed public, few consider the hemispheric proposals advanced by the United States as a step in the direction of world trade liberalization. 8
Explanations for Current Brazilian Strategy
Certain theories of regionalism may be used to evaluate the possible explanations for Brazil’s current regional strategy. In a recent work, Andrew Hurrell (1995b) classifies these theories according to the level of analysis of their respective explanations: systemic, regional, or domestic. Although these approaches deal with the phenomenon of regionalism rather than foreign policy per se, they are useful in identifying the factors that can influence the regionalist strategy of any nation, which is why I shall employ them to discuss the case of Brazil.
In the case of regionalism, systemic theories promise a high analytical yield, since the simultaneity of regional cooperation processes at certain periods, including the one currently under way, highlights the weaknesses of explanations based on domestic variables. Systemic explanations aim to account for converging preferences among states and assume that the demand for regional cooperation is identical, regardless of a country’s domestic characteristics. According to Hurrell, the two most frequent systemic explanations are neorealist arguments and hypotheses based on structural interdependence and globalization. When applied to foreign policy, they generate diametrically opposed explanations of each country’s degree of freedom in regional cooperation.
The neorealist explanation of regionalism stresses the pressures and opportunities derived from geopolitical and geoeconomic transformations. Mindful of the assumption of self-help that is characteristic of this approach, it views regionalism as a neomercantilist strategy aimed at reducing eventual external constraints and obtaining more favorable conditions for international political and economic competition (Hurrell 1995b: 48). Whereas the neorealist explanation emphasizes the dimension of choice, however limited, in foreign policy, the globalist explanation is more deterministic in its emphasis on the compulsory nature of choice and the disciplinary changes regional arrangements impose upon domestic policy. From this standpoint, globalization exerts pressure toward homogenization and convergence around market-oriented policies. Regional cooperation policies are seen as attempts to effectively lock particular countries into an overall strategy of economic liberalization and deregulation, which, in the final analysis, serves to buttress neoliberal reforms.
If regionalist strategies imply a reduction in a state’s freedom of action with regard to other states, the systemic approach has the merit of highlighting the changes in external parameters that explain why states choose to reduce their freedom to act. Surprisingly, the interpretation of systemic change is distinct, as are the implications derived regarding probable strategies. From the neorealist perspective, these implications are typically offensive; from the globalist perspective, defensive. Moreover, if systemic perspectives are useful for circumscribing moments of change in strategy, they are insufficient to indicate the direction of foreign policy change because this direction depends on the response of each state in question.
Brazil’s current strategy toward hemispheric regionalism suggests the reach and limitations of systemic explanations, because it combines both offensive and defensive elements. The former are present in the view that the regionalist orientation constitutes a change to or adaptation of previous development strategies and international orientations but maintains connections to the past in the form of a strong autonomist orientation and aspirations to a greater international role in a world where economic competitiveness has become crucial. This orientation draws support from sectors of the state bureaucracy, especially the foreign ministry and the armed forces. It is also backed by industrial interests, especially those such as capital goods industries and industrial labor unions that emerged under the auspices of the protected, state-sponsored model.
The orientation toward deeper integration with the global economy draws support from the economic bureaucracy responsible for macroeconomic policy (and stewardship of economic stabilization), as well as from the financial community and highly competitive emerging sectors like agribusiness, which have grown and developed on the margins of state support. These advocates of deeper integration prefer hemispheric regionalism to subregional arrangements (namely, Mercosur, which is viewed as a second-rate alternative for achieving the true goals of economic and trade liberalization).
The theories that Hurrell classifies as regional analysis—neofunctionalism, neoliberal institutionalism, and constructivism—are less useful for foreign policy analysis because they are geared toward explaining the dynamics of existing regionalisms rather than their origins. However, current hemispheric regionalism does not represent the institutional continuation of preexisting subregional arrangements, whether as a functionalist spillover or the reinforcement of a preexisting regional identity or awareness. In the Brazilian case, motivations located at the regional level appear to have little explanatory power. For reasons already mentioned, regionalism is a second-best strategy for Brazil regarding the institutionalization of multilateral arenas and rules. Moreover, Brazil’s identification with Latin America—or with the Americas as a whole, for that matter—is relatively fragile in the face of the inward-looking interests that have played such a powerful role in determining Brazilian behavior.
Neoliberal institutionalism appears to have some relevance for the case at hand, if only in elucidating the lesser priority accorded the regional arena than the multilateral arena. According to this perspective, regionalist strategies aim to solve dilemmas of collective action in the face of externalities and mutual interdependencies by reducing transactional costs, diminishing asymmetries of information, and facilitating intraregional linkages (Hurrell 1995b: 63; Keohane 1984). As Stephen Krasner (1993) has demonstrated, perspectives developed on the basis of dilemmas of cooperation (i.e., situations in which cooperation is difficult or nonexistent owing to opportunistic incentives for free-rider behavior) focus only on the benefits of cooperation and fail to account for the more problematic issue of the distributive aspects of cooperation.
From this perspective, Brazil—which, unlike the United States, is not a demandeur of stricter rules in international economic regimes—prefers that trade regimes be negotiated in arenas such as the WTO, where a larger membership prevents the adoption of more restrictive trade rules. This preference is why the United States has pursued the FTAA, an arrangement with fewer and weaker members, as a first step toward greater international regulation in areas of its own interest, such as environmental and labor standards and intellectual property rights. What matters for Brazil, and other countries as well, is the nature of the rules and negotiating arenas, because they have different distributive consequences.
Among the domestic perspectives mentioned by Hurrell, an analysis of regime type and democratization processes is the most germane to the case at hand. Democratization of Southern Cone political regimes eroded Brazil’s previous “defensive positionalism” in relation to Argentina, opening the way for subregional cooperation (Soares de Lima 1996: 156). As for hemispheric regionalism, Latin American democratization appears to be more significant for the U.S. regionalist stance than for the stance of the Latin American countries. It is unlikely that the United States would lead the formation of a free trade area in the Americas if the region were ruled predominantly by military regimes. However, political democratization may be important in cases where there is opposition to government regional policies. In a context of democratic normality, opposition and divergence can play itself out in the partisan political arena.
The remaining perspectives—state coherence and policy convergence—are less useful for explaining Brazil’s regionalist strategy. The former establishes certain conditions necessary for integration and is thus less capable of distinguishing between specific individual strategies. The latter posits a relationship between the dynamics of regional integration and the convergence of domestic policy preferences among states located in a given geographic area (Hurrell 1995b: 70).
One could therefore argue that Latin America’s previous import-substitution development strategies hindered the deepening of regional integration by penalizing exports and eliminating intraregional economic complementarities. In this view, the crisis of the closed, state-sponsored economic model eventually led Latin American countries to converge and adopt the liberal economic policies driving the new regionalism in the Americas. Like the preceding argument, this line of reasoning fails to take into account domestic specificities and assumes that the convergence of national policies occurred in a homogeneous fashion. This approach resembles the predictions about the effects of globalization described earlier.
Situated at the domestic level, the argument emphasizes the use of a regionalist strategy by domestic actors who aim to consolidate market-oriented reforms implemented by governments seeking to change economic models. From this perspective, the importance of Mexico’s NAFTA strategy would lie not so much in the resulting economic liberalization but rather in “the ways in which the treaty locks Mexico into the particular set of domestic economic policies and insulates its economic reforms from future domestic political interference” (Hurrell 1995b: 71). In the case of Brazil, as I have already observed, this explanation would be only partially true, because the sectors with the political initiative in this process prefer not to handcuff themselves to a well-defined strategy. However, the argument does have the merit of acknowledging the interests of political and economic actors who stand to benefit from systemic incentives (globalization).
On the basis of the foregoing discussion, it is possible to link the different levels of analysis in the explanation of Brazil’s regionalist strategy. Systemic parameters are of fundamental importance because they constitute the economic constraints that led to the crisis of the previous economic model. Geopolitical transformations are also important because they generate uncertainty among actors about possible configurations in a new international order. Changes in economic parameters penalize domestic actors who benefited from the earlier model while rewarding other actors who, for a variety of reasons, are able to forgo (or no longer require) the incentives available under the previous development strategy. In the Brazilian case—the most successful experiment in state-led development among peripheral countries—the former actors have maintained their political clout independent of economic changes. It is the inclusion of political variables related to government policy orientations and winning coalitions that explains why Brazil’s strategy possesses offensive and defensive characteristics, an outcome that a systemic explanation would be unable to account for.
Brazil’s strategy is offensive because the politically dominant coalition was constituted in the shadows of the previous development strategy. The defensive component results from the acceptance by these same actors of the need to change the model in light of global economic and geopolitical transformations. Their preference, however, is for gradual change over a longer period. Those who advocate deeper and swifter economic change and who are more inclined to welcome the immediate acceptance of hemispheric regionalism are not the actors currently setting the initiative for Brazil’s regionalist strategy.
From a political standpoint, Brazil’s current strategy reflects the victory of the foreign ministry’s position on regionalism. In fact, the ministry remains the chief government actor in the hemispheric policy field. Diplomats begin with the premise of U.S. power, especially within the hemisphere, a premise that calls for a nonconfrontational strategy. However, in their scenarios for a new world order, they stress multipolarity and the opportunities it affords for Brazil’s international ascent.
A certain measure of autonomy in relation to the United States—something Mexico forfeited by joining NAFTA—is also seen as important insofar as it allows for the maintenance of an independent dialogue with extrahemispheric powers in Europe and Asia (especially Japan and China). One can speak, therefore, of a connection between Brazil’s current stance on hemispheric issues and its aspiration to a permanent seat on the UN Security Council.
Brazilian diplomats justify this gradualist strategy as a pragmatic political way to ensure that Brazil is not limited exclusively to the FTAA theater while other processes of negotiation and cooperation are under way. They point in particular to Mercosur’s movement in the direction of a common market arrangement, the creation of a South American free trade area through agreements between Mercosur and its regional neighbors, the establishment of closer economic ties between Mercosur and the European Union, progress in multilateral negotiations in the WTO, and Russia and China’s recent adhesion to the WTO (Abdenur 1997: 67). 9
Given that Brazil has already promoted a wide, unilateral opening of its markets, diplomatic representatives also believe it is not in Brazil’s interest to negotiate new concessions with the United States in exchange for U.S. elimination of “anomalous” nontariff barriers targeting such Brazilian exports to the United States as orange juice, textiles, steel, and shoes. In their view, removal of these barriers ought to precede any future negotiations on access to the Brazilian market (Abdenur 1997: 68–69).
All of the factors examined in this section are important. Along with Brazil’s continental dimensions, which tend to generate reduced incentives for regionalization because of its relative size and potential market, they explain why Brazil has adopted a foreign policy of restraint in the face of hemispheric regionalism. In this sense, albeit for different reasons, Brazil and the United States have both pursued the same objectives for strategic regionalism in the Americas.
Limits and Possibilities of Brazilian Foreign Policy and Future Consequences for Hemispheric Regionalism
The first consequence of the FTAA for Brazilian foreign policy has been to increase considerably the societal or interest-based component in foreign policy formation. As I discussed earlier, Brazilian strategy has relied on support from the business community, which actively participated in shaping the country’s negotiating position.
Another consequence has been to increase political coordination between Brazil and other Mercosur members, especially Argentina, and, concurrently, to extend the degree of joint regional action. Following the Miami summit in 1994, Brazil helped lead efforts to develop a common platform through the formation of the Rio Group, thereby acknowledging the need for more time in establishing a free trade area. Brazil also advocated that Mercosur and other subregional agreements be accepted as building blocks for future hemispheric liberalization (Abdenur 1997: 63).
At the same time, the FTAA process has exposed some of the inconsistencies in Brazil’s position toward the Southern Cone, allowing divergences to surface between it and its Mercosur partners. For instance, Brazil’s demands for greater institutionalization within a future FTAA show the ambiguity of its opposition to pressures for institutionalization within Mercosur (Machado and Motta Veiga 1997: 4). And the implementation of a hemispheric free trade area will further expose Brazilian protectionism to Brazil’s Mercosur partners, perhaps forcing it to make concessions (Abreu 1997).
Be that as it may, the new economic realities of Mercosur have been Brazil’s main asset in negotiations. Without Mercosur, Brazil’s position would be weakened. At the same time, the density of ties between partners provides an assurance that these economic realities will be taken into account when the partners design their respective continental negotiating strategies. 10
Evidently, any speculation about the consequences of current foreign policy on the future of hemispheric regionalism must first take into account the existing power asymmetries between the United States and its future partners and the extremely attractive prospect of gaining access to the U.S. market. However, U.S. resource superiority and its asymmetric interdependence vis-à-vis its potential partners have yet to translate into greater U.S. bargaining power for domestic political reasons. Indeed, the potential impact of these factors has been virtually nullified by the Clinton administration’s inability to define clearly its goals or strategy for FTAA negotiations.
In this context, Brazil does possess bargaining power and has been able to assume regional leadership in the process to date. Without fast-track approval, the U.S. administration is unable to push ahead with bilateral trade agreements like the one devised for Chile, which could lead to irresistible pressures to speed up FTAA negotiations. As long as the United States has so little to offer at the bargaining table, the initiative will remain with those interested in blocking negotiations. Because Brazil’s inclusion is of vital importance in imparting greater economic density to an eventual hemispheric extension of NAFTA, Brazil can therefore momentarily assume the role of veto player in hemispheric regionalism.
From a domestic standpoint, the Brazilian situation is the opposite of that prevailing in the United States. Whereas the White House and Congress have frequently been at cross-purposes, the Brazilian government position enjoys the necessary political and economic support for the reasons spelled out earlier. The Brazilian government is also advantaged by the fact that talks have so far focused on the negotiating process and timetable rather than more substantive issues.
Were the White House and Congress to reach an understanding on the FTAA and make it a U.S. foreign policy priority, Brazil’s role as veto player would vanish altogether (Machado and Motta Veiga 1997: 4). Brazil is incapable of blocking strong U.S. pressures for the FTAA if such pressures were ever to develop. In such a context, Brazil’s bargaining power would hinge on its capacity to articulate, through Mercosur, an alternative to the FTAA model as proposed by the United States. The outcome of this scenario is highly uncertain. What does seem certain is that at some future stage in negotiations, Brazil’s bargaining power will become increasingly dependent on its acceptance of the concept of qualified sovereignty with respect to Mercosur. This would represent a de facto “paradigm shift in the conceptual bases of Brazil’s foreign relations” (Barbosa 1992: 122).
A somewhat different question is whether Brazil would be able to counterbalance an overwhelming U.S. presence in the region. Alone, the answer is no. None of the countries in the region has the power to single-handedly counterbalance the United States. However, an alliance between regional middle powers could make the difference, especially in light of growing interest in the region on the part of extrahemispheric powers in Europe and Asia. 11
Hemispheric regionalism is a U.S. project, and in spite of profound changes in the international order over the past century, it retains a strong resemblance to its historical predecessor, the Western Hemisphere Idea. Political outcomes, however, are not determined solely by power structures. They are also the product of contingencies and unexpected consequences. Hemispheric regionalism is a telling example in this regard. Notwithstanding its hegemonic intention, the onset of this process not only has ushered in deeper cooperation in the Southern Cone but has also diminished the distance between the historically separate regions of the Americas. A more formalized articulation between the middle powers in North and South America would appear to be the most effective means of achieving a more balanced dialogue with the United States.
Endnotes
Note 1: For the evolution of regionalism in Brazilian foreign policy, see Soares de Lima (1996). Back.
Note 2: There are significant economic reasons for Brazil’s desire to consolidate Mercosur: “Brazil’s exports to its Mercosur neighbors are characterized by substantial value-added by the Brazilian work force, in contrast to the predominance of raw materials and agricultural produce that usually predominate in the exports of so-called developing countries” (Purcell 1997: 94). Back.
Note 3: For an overall assessment of the Cardoso administration, see Purcell and Roett (1997). Back.
Note 4: For an evaluation of the current FTAA process from the standpoint of Brazilian economists, diplomats, and businesspeople, see “Perspectivas de Integração Hemisférica” (1997). Back.
Note 5: Brazil’s negotiating posture is set forth in Lampreia (1997); see also Abreu (1997). Back.
Note 6: See interview with the Brazilian ambassador to the United States, Paulo Tarso Flecha de Lima, in Jornal do Brasil (1997). Back.
Note 7: For the business sector point of view, see, for example, “A ALCA e o Comércio” (1997); “A Importância do Setor Privado” (1997); “Empresários Ganham Espaço no Debate” (1997); “Ordem é Mobilizar o Empresariado” (1997); and “Os Empresários Ganham Força” (1997). Back.
Note 8: See interview with the Minister for Industry and Commerce, Dr. Francisco Dornelles, “Nossa” (1997); see also “Prazos” (1997); “Embaixador” (1997); and Dupas (1997). Back.
Note 9: Certain critics of the diplomatic handling of negotiations on continental integration have remarked on the prevalence of “properly diplomatic diplomacy.” This approach prioritizes procedural issues at the expense of debate on substantive issues and ultimately aims to defer measures geared toward promoting the competitiveness of Brazilian products (Guilhon Albuquerque 1997). Back.
Note 10: Trade between Mercosur partners increased from U.S.$4 billion in 1993 to an estimated U.S.$17 billion by the end of 1997. Back.
Note 11: For speculation along this line, see Mace and Thérien (1996a: 66). In the United States, supporters of a hemispheric free trade area fear that Brazil will opt out of a continental arrangement if it is successful in achieving formal agreements with South American countries and with the European Union. From their perspective, this would give Europe a comparative advantage over the United States in dealings with South America and thus be contrary to U.S. interests (Purcell 1997: 96). Back.
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