O backstop brasileiro: a modernização da agricultura brasileira e a sua contribuição para o desenvolvimento nacional by Mark Langevin

O backstop brasileiro: a modernização da agricultura brasileira e a sua contribuição para o desenvolvimento nacional

Revista Jurídica da Presidência

v. 19, n. 119 (2018

Mark S. Langevin


Este trabalho analisa o papel da agricultura brasileira para o desenvolvimento econômico do país ante o atual cenário de recessão. Primeiramente, faz-se uma análise dos ganhos mensuráveis do Brasil no desenvolvimento agrícola nas duas últimas décadas. Depois, são avaliadas as contribuições desse setor para os desenvolvimentos econômico e social no século XXI. Então, aborda-se o Caso do Algodão a fim de ilustrar a modernização agrícola brasileira e suas contribuições para o desenvolvimento e para a política comercial. Por fim, são explorados os desafios da inclusão social e da sustentabilidade ambiental como obstáculos primários para o aprofundamento do desenvolvimento agrícola brasileiro no século XXI.

Lei aqui.

The Brazil - United States Cotton Dispute: An Annotated Bibliography by Mark Langevin

The Brazil–United States Cotton Dispute

Annotated Bibliography

Updated August 2017

Compiled by Mark S. Langevin, Ph.D., Director of the Brazil Initiative

Elliott School of International Affairs-The George Washington University

langevin@gwu.edu/Tel. 202-744-0072

            The Brazil–United States cotton dispute was a World Trade Organization (WTO) dispute settlement case (DS267). The case focused on United States cotton production support programs and agricultural commodity export credit guarantee programs that were found to be non-compliant with the WTO Agreement on Agriculture (AoA) and the Subsidies and Counter Measures (SCM) Agreement. Brazil brought the case to the WTO in 2002. The WTO’s Dispute Settlement Body (DSB) ordered the U.S. government to eliminate its cotton production subsidies as well as its agricultural commodity export guarantee programs in 2005. The United States appealed, but eventually lost the case altogether in 2009 when the WTO arbitrator approved the largest trade sanctions in history. The arbitrator also ruled that Brazil could impose so-called “cross-retaliation measures” that could include intellectual property protections.

            Following the 2009 decision, the U.S. government quickly moved toward negotiations with Brazil. In early 2010, a temporary bilateral agreement was negotiated and the U.S. agreed to pay the Brazilian Cotton Institute $147.3 million a year, an amount based on the WTO arbitrator’s calculation of average annual damages to Brazilian cotton growers, until a mutually agreeable solution could be negotiated. On May 17, 2013, the Brazilian cotton producer’s association, known as the Associação Brasileira dos Produtores de Algodão, and the U.S. National Cotton Council signed a “Letter of Joint Recommendations” that aimed to assist the two governments in negotiating a final solution to the case.

On October 1, 2014, Brazil and the United States reached an agreement to resolve the long-running cotton dispute by signing a new memorandum of understanding (MOU) that included: 1) Brazil relinquished its rights to countermeasures against U.S. trade or any further proceedings in the dispute; 2) the United States agreed to new rules governing fees and tenor for the GSM-102 export credit guarantee program; 3) Brazil agreed to a temporary Peace Clause with respect to any new WTO actions against U.S. cotton support programs while the Agricultural Act of 2014 is in force or against any agricultural export credit guarantees under the GSM-102 program as long as the program is operated consistent with the agreed terms; and 4) the United States would make a one-time final payment of $300 million to the Brazil Cotton Institute (IBA).

            This partial annotated bibliography assists efforts to further examine the cotton dispute, the underlying global political economy, the WTO dispute settlement mechanism, and bilateral relations between Brazil and the United States. The bibliography was compiled by Mark S. Langevin, Ph.D., Director of the Brazil Initiative and Research Professor at the Elliott School of International Affairs-The George Washington University and International Advisor to the Associação Brasileira dos Produtores de Algodão (ABRAPA).

Review the entire annotated bibliography here.

Please send additions and corrections to Mark S. Langevin, Ph.D. at: langevin@gwu.edu.

Brazil’s Backstop: The Modernization of Brazilian Agriculture and its Contributions to National Development by Mark Langevin

Brazilian agriculture is a fundamental pillar of national economic development in the 21st century. Baer reminds that agriculture has been the “engine of economic growth” since the colonial era (2014:281) and Barros reports that “Agriculture was the foundation upon which Brazil’s economic system functioned up to the beginning of the twentieth century (2009:83).” Agriculture was exclipsed by manufacturing and services during the twentieth century, but the onset and deepening of Brazil’s import substitution industrialization (ISI) model and the rapid pace of urbanization required signficant income redistribution from agriculture and mining to finance mounting fiscal demands placed upon the state. Today, Brazilian economic and fiscal stability continues to be anchored to agriculture and agricultural commodity exports. Agriculture is Brazil’s backstop.[1] 

Read the entire Brazil Initiative Working Paper here.

[1] The term “backstop” is used in finance and refers to “the act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares.” Investopedia. Accessed at: http://www.investopedia.com/terms/b/backstop.asp.

Temer and Earmark Populism by Mark Langevin

Brazilian President Michel Temer dodged a bullet yesterday by galvanizing a majority in the lower house of deputies of the Brazilian Congress to vote against his removal and trial by the Supreme Court for corruption. Temer’s approval ratings hover around 7 percent, and most Brazilians want him investigated for corruption; but these documented facts did not dissuade 263 deputies (from a total of 513) from absolving the president.

Why did so many betray the popular will?

Earmark populism is a method for obtaining the votes of congressional representatives and pacifying their constituents at home. President Temer used the promise of earmarks to trigger votes in his favor; and supply his congressional supporters with justification that can be sold to voters back home. According to the Folha de São Paulo’s report, Temer has promised more than 4 billion reais in additional spending in 2017, spread across dozens of earmarks, to obtain the necessary parliamentary support to stave off a trial in the Supreme Court. Contas Abertas also reports that Wladimir Costa, federal deputy from the state of Pará and member of the Solidariedade party, made famous by his tattoo “Temer” received a promise of $7 million reais in earmarks. Costa stated that his tattoo cost 1,200 reais and served as a memorial to Temer, “The best president in the history of Brazil.” His claim does not deserve a response.

Costa’s earmarks will apparently be spent on such programs as sustainable rural development and strengthening the universal health care program SUS in the state of Pará.  These seem to be worthwhile public initiatives, but the use of government funds to secure a vote to avoid prosecution for corruption is ironic and disappointing for those committed to fighting corruption in Brazil. Moreover, most of Temer’s supporters in the lower house of congress voted in favor of the impeachment of former President Dilma Rousseff last year for her fiscal management, her use of the so-called “pedaladas.” Many of these same deputies were willing to accept or coordinate earmarks just as the government appears to be failing to meet its fiscal deficit targets (spending more than forecasted to deepen the deficit).

Remember, many notable economists supported Dilma’s impeachment due to what they argued was fiscal mismanagement. Today, these economists are either silent or stand betrayed by the consequence of their own political action.

The well-respected economist Monica de Bolle defended her support for Dilma’s impeachment in the pages of Terraço Econômico, in part by claiming that the former president was responsible for fiscal mismanagement related to the pedaladas.  It is important to remember that the so called pedaladas were budgetary operations that simply delayed transfers from the Federal Treasury to the Banco do Brasil e Caixa Economica for public programs, including small farmer financial support and the Bolsa Familia social welfare programs.  Bolle and others, including Mansueto Almeida, claimed these budgetary actions were irresponsible at best and possibly constituted the “crime of responsibility” that served as the justification for impeachment. Then came Temer.

Today, Mansueto Almeida remains in his position with Temer’s government, but silenced by the President’s earmark populism to avoid prosecution. Monica de Bolle is a strident critic of Temer, and recently noted that he needs to leave or risk “institutional corrosion” that might place Brazil on the path to become another Venezuela. Ameida, last May, argued that the government must carry out a fiscal adjustment and push forward a reform agenda that can initiate economic recovery, and that two years under Temer is sufficient to place Brazil back on the road to growth and fiscal stability.

Monica and Mansueto are entitled to their critique of former President Dilma and her fiscal affairs. They both spent 2015 and 2016 trying to explain the details of the pedaladas and how they may have jeopardized fiscal stability and economic development.  However, Temer’s earmark populism and Attorney General Rodrigo Janot’s charge of corruption against the president pose a more straightforward challenge to explain. No doubt Monica and many others will bear down on the damage done by failing to achieve the fiscal targets set for 2017, and others including myself, will point to the now obvious connection between earmark populism and congressional efforts to protect the guilty from prosecution. Mansueto continues to work for Temer’s Finance Ministry, but for how long?  How long will it take for Mansueto and his boss, Finance Minister Henrique Meirelles, to understand that the government they work for is now actively working against fiscal stability, economic recovery, and the Lava Jato prosecutions?

I hope it does not take too long because Brazilian democracy hangs in the balance.