It is a pleasure to return to South Africa so soon after my presentations for the post-graduation programmes of UNISA in Pretoria, Witts University in Johannesburg and University of the Cape, in Cape Town, last March. Of all the analysis of Brazil´s main strategic partners conducted by the Institute of International Relations (IRI), of the Brazilian Ministry of Foreign Affairs, the one on South Africa was the first, and so far the only one, to have been translated into English and presented to the academia of the country under examination. The original merit of the programme, of course, was to induce Brazilians to study and understand South Africa and its foreign policy. This was subsequently maximised by the idea of making this symposium in South Africa.

For the former, I would like to extol the efforts and leadership of Ambassador Samuel Pinheiro Guimarães, the head of the IRI until a few days ago, when he was dismissed for that most intolerable offence to the forces of darkness: the crime of expressing an opinion. In the particular instance, the thoughts expressed were not only in accordance with his Constitutional rights, but were a duty ascribed by law to public officials. With respect to the latter, I would like to commend the initiative and efforts of the South-African Ambassador to Brazil, Mr. Mbulelo Rakwena.

The original subject matter of my presentation of today would be my chapter of the book “Brazilian Views on South-Africa´s Foreign Policies”[1] which concerns the Agreement on Trade, Development and Co-operation between the European Union and South Africa. As this chapter is available to you in the copies of the books you have received, I chose to speak on the subject of free trade agreements and developing countries. Thus, I would like to make a general introduction about the development of regional free trade agreements since the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), launched in 1986 and concluded in 1993, before discussing the matter at hand.

During the Uruguay Round of the GATT, there was a generalised frustration with the multilateral system, as a result of the acrimonious confrontation between developed and developing countries with respect to the agenda for negotiations within the ambit of the round. The developed countries desired the inclusion of the so-called new areas, comprising intellectual property, investments, services, etc. On the other hand, developing countries refused to extend the objective of the agreement without the inclusion of the traditional areas of trade, agriculture and textile, excluded from the multilateral system since its inception [2].

As a result of the impasse, the formulation of an agenda was frustrated until 1991, when a compromise was reached. Thus, for the first time, the United States of America abandoned its traditional posture of favouring the multilateral system to pursue also an agenda of regional trade pacts. The European Union (EU) followed suit and the same did many developing nations. However, the strategic objective of the hegemonic powers was different than those of developing nations in the free trade agreements they sought.

For the USA, in particular, and to a lesser extent, to the EU, the question of free trade agreements became a means of extracting concessions from weaker trade partners in a way that had become very difficult within the multilateral system of the WTO, as a result of the consensus required and the trenchant opposition from a group of developing countries. On the other hand, developing countries sought, in the regional free trade agreement, access for their products with access denied by the main trade partners, particularly in the area of agriculture, but also in a smaller scale, in industry. Accordingly, the Treaty of Asuncion was signed in 1991 contemplating the creation of the Common Market of the South (MERCOSUL), which came into existence in 1994, between Argentina, Brazil, Paraguay and Uruguay. In the very same year, the North American Free Trade Agreement (NAFTA) was signed between the USA, Canada and Mexico.

The fact that NAFTA was negotiated, in accordance with a leading US specialist, with a at best notoriously incompetent government who characterised itself “by the virtual acceptance of all the demands and by making virtually all the concessions” [3] permitted the USA to have a framework agreement for other trade partners [4]. This framework has the following characteristics:

I. Affirmative agenda

a. the opening of the services´ markets of the trade partners;

b. the creation of a “hub and spoke” flow between hub and spoke in trade of services and industrial goods;

c. the lowering of tariffs, with a view of ensuring the diversion of trade from other partners;

d. the formulation of rules of origin which will further alienate third trade partners;

e. free flow of currencies and guarantee of convertibility by the governments of the spokes to private and public creditors in the hub;

f. the imposition of the legislative criteria of the hub;

g. the emasculation of the Judiciary powers of the spokes in trade matters; and

h. if possible, an early harvest of all of the above.

I. Defensive agenda

a. the preservation of the agricultural subsidies;

b. the preservation of the unilateral legislation, including on anti-dumping [5];

c. the preservation of the idiosyncratic constitutional and legal regime that places national law above international agreements;

d. the preservation of horizontal barriers in access of service providers from the spoke countries;

e. the granting of access only to low cost low value-added consumer goods from the spokes; and

f. the disposition of making concessions only in the distant future, subject to negotiations in the multilateral level.

The model worked very well for the USA within NAFTA. As a result, US exports to Mexico increased approximately 5O% and trade dependence of Mexico to the USA increased from about 77% to a staggering 90% in the years subsequent to the execution of the agreement. Moreover, the USA dominated the main areas of the services´ markets of Mexico, such as the financial sector. Consequently, Mexico lost, as a result of lack of access of its service providers to the USA, the economies of scale for a nationally and internationally competitive national sector of services. Thus, Mexico had to specialise its economy in the provision of cheap consumer goods to the US market. Internally, its service providers were relegated to the low end of the market.

The EU learned fast from such lessons, adopted most, if not all, of the US agenda for the negotiation of trade treaties with developing countries and hurried in establishing a network of such agreements that has now reached the impressive number of 27 and is currently negotiating 15 more. The USA has presently two of those agreements, but is now pursuing a much large number, including the Free Trade Area of the Americas (FTAA), which would be NAFTA expanded. As difficulties in the World Trade Organisation (WTO), the successor of GATT, augment, the prospects of a trade war between the two hegemonic powers, the US and the EU, increase. US regional initiatives have been hampered by the lack of trade negotiating authority from the legislative to the executive branch of government.

As a result, EU and the USA try to develop a network of free trade agreements with other smaller trade partners which would ensure trade on enormously favourable terms for each of the hegemonic powers, as well as the exclusion of the other. However, in some cases USA and EU will co-operate, in order to be more efficient with the “negotiations” with developing countries. Such was the case of the “peace clause” in agriculture, with a view to maintaining the status quo of the subsidies in the sector by both powers until 2003. Similarly, in multilateral negotiations, often EU and the USA try to clinch a deal for the whole world. In the words of Sir Leon Brittan, former Trade Commissioner of the EU, on the agenda for the launch of the miserably failed Millennium Round of the WTO: “I was told by my senior Commission officials working for me that what I really had to do was to get a deal with the Americans”[6].

Developing countries, subject to enormous pressures from the USA and EU for the execution of trade agreements, find themselves in a quandary. In the first place, they are not offered fair access to the markets of the trade partners. Secondly, a most unattractive model is offered to them. This model ensures that they will be sentenced to the provision of ancillary services and low cost consumer goods to the markets of the main partners. This model is not much different than what the German Nazi government devised for the populations of Eastern Europe, in case it won the war. In addition, the model is inexorably faded to failure, as there are limits to consumption in the hegemonic powers and already a great percentage of trade is done under it, including approximately 37% of Asia´s Gross Domestic Product [7]. Already, the USA runs an annual trade deficit in the order of US$ 500 billion[8].

The best alternative for developing countries would be, of course, eschewing to agree to and execute such hegemonic trade agreements, favouring rather the execution of trade agreements with other developing countries, whilst leaving for the WTO negotiations with the main partners. In the multilateral forum, developing countries, standing together, would have a better chance of resisting effectively to the imperialistic designs.

If, however, this would not possible, because pressures from one of the hegemonic powers are irresistible, in order to minimise losses, the developing country in such a dire condition should strive to build a network of trade agreements involving not only both powers, but other developing countries as well.

In my view, the free trade agreement between South Africa and the EU is a very typical commercial treaty between a developing country and a hegemonic developed partner – in many ways, it is similar to NAFTA, except that the South Africa/EU agreement is worsened by being linked with co-operation. Under the guise of co-operation, many concessions were extracted from South Africa, and the fact that co-operation objectives are decided annually increases South-Africa vulnerability, as such meetings provide a regular forum at which the EU can press South-Africa for increased concessions. This is what is happening at present in the area of fisheries and also with the retention, by the EU, of the quota granted South Africa under the agreement, for the export of a reasonably small quantity of wines.

It is at this point that I would like to evoke Mahatma Gandhi´s unforgettable lesson: “The test of friendship is assistance in adversity, and that too, unconditional assistance. Co-operation which needs consideration is a commercial contract and not friendship. Conditional co-operation is like adulterated cement which does not bind.” [9]

Accordingly, the agreement is not only inherently unfair for South Africa, but also trade exclusionary for its other trade partners. This is only one more reason for Brazil and Mercosul to pursue, with renewed vigour, determination and interest, the ongoing negotiations for a trade pact with South Africa.

Ladies and Gentlemen, thank you very much.