Non-discrimination is the basic principle of international trade. Under the World Trade Organization (WTO), non-discrimination gives rise to two important pillars, national treatment and the most-favored-nation clause. This clause requires that any commercial advantage offered to any country, member or not of the WTO, be also offered to other nations of that organization. The national treatment principle, on the other hand, ensures that imported products must receive the same treatment given to domestic products. Based on these principles, which seek to prevent discrimination on the origin and between products, the WTO aims to promote trade liberalization globally. Moreover, the WTO offers its members a number of trade defense measures against dumping (anti-dumping measures), against subsidy (countervailing measures) and against import surges (safeguards).

However, the international trade complexities and disparities that hinder the process of trade liberalization led the 1979 Tokyo Round of the Organization to establish the enabling clause. This clause aims to create a legal framework, parallel to the multilateral negotiations, to promote the gradual advance of free trade through trade preference systems: the Generalized System of Preferences (GSP) and the Global System of Trade Preferences (GSTP).

Both the GSP and the GSTP are ruled by the United Nations Conference on Trade and Development (UNCTAD). While the GSP deals with unilateral tariff concessions from developed to developing countries without the need for extending them to other WTO member states, the GSTP regulates tariff concessions between developing nations. Thus, both the GSP and the GSTP have consolidated themselves as exceptions to the basic principle of non-discrimination.

Regarding the recent historical dimension of the trade agreements, it is possible to identify three great waves of trade regionalism.[1] The first one was marked by the beginning of the process of unification of Europe through the creation of the European Coal and Steel Community (ECSC) in 1951, followed by the formation of the European Economic Community (EEC) in 1957. These experiments influenced, for example, the creation of the Latin American Free Trade Association (LAFTA) in 1960.

During the second wave, more countries joined the EEC, which, in 1993, with the signing of the Maastricht Treaty, was renamed the European Community (EC). The EC progress towards the countries of Eastern Europe (satellites of the former Soviet Union) led the United States to abandon its traditional appreciation for multilateral negotiations under the General Agreement on Tariffs and Trade (GATT), of the WTO, and to sign a bilateral agreement with Canada (1988), which was then extended to Mexico in 1990, thus consummating the creation of the North American Free Trade Agreement (NAFTA). In the same period, the Southern Common Market (Mercosur) and the Andean Community were created in South America, while in Africa and Asia many other similar agreements were signed.

Finally, the third stage has been characterized by the influence of the United States and the European Union. However, the peculiarity of this present moment lies precisely in the participation of the Asian countries, traditional supporters of the multilateral trade negotiations under the WTO. In addition to the 1997 financial crisis and the failure of the 1999 WTO negotiations in Seattle (USA), the proliferation of regional agreements in Asia was also due to the intense productive integration process that has taken place in the region in recent years.

The multilateral WTO agreements are characterized by their amplitude, by their binding effects and for incorporating complex issues, such as the service sector, foreign investment and intellectual property. This scope is a result of the global productive system rearrangement in recent decades, which demands an increasingly more open and less discriminatory trade.

With regard to market access, the Preferential Trade Agreements (PTAs) aim at the reduction and/or elimination of import tariffs and the elimination of nontariff barriers. As for the regulation of international trade, it deals with the incorporation of international trade rules under the WTO (WTO-in), the deepening of these very same rules (WTO-plus) and the incorporation of rules not yet covered by the WTO (WTO-extra). This way, it is possible to perceive the regulatory dimension of the PTAs as a necessary condition or even as a deliberate strategy for the countries’ integration into the global production chain.[2]

In this context, the WTO’s World Trade Report 2011 points out that the Regional Trade Agreements involving two or more countries from different geographical regions have become known as Preferential Trade Agreements. This is due to the fact that the unilateral preference systems (GSP and GSTP) and other nonreciprocal agreements fall within the concept of Preferential Trade Agreements. In February 2016, the WTO registered 284 trade agreements on goods and services involving countries from different regions of the world.

Finally, it must be stressed that the PTAs are agreements that also occur in the legal framework of the WTO, thus counteracting the argument about a possible weakening of the Organization. Actually, the PTAs stand out as a world trade liberalization strategy that takes place along with the multilateral negotiations of the Doha Round. Thus, the WTO now offers two negotiation channels for international trade liberalization: a multilateral one, which grants greater bargaining power to developing countries (Doha Round); and a plurilateral one, which grants greater bargaining power to developed countries.

The current international trade scenario poses, then, a serious challenge to Brazil, to the extent that multilateral negotiations within the WTO, the traditional strategy for the Brazilian diplomacy, have been abandoned by some of the world’s major commercial powers: the United States, the European Union and Japan. In 2013, President Barack Obama argued for the creation of the Transatlantic Trade and Investment Partnership (TTIP), involving the United States and the European Union. Last year, 2015, the United States, Canada, Mexico, Chile, Peru, Japan, Vietnam, Brunei, Singapore, Malaysia, Australia and New Zealand signed the Trans-Pacific Partnership (TPP).

It is important to remember that even the negotiation over the TTIP between actors of the same relevance in terms of economic and social development, such as the United States and the European Union, has been quite complex. Regarding the TPP, the conditions are asymmetric. There are two major trading powers (NAFTA and Japan) negotiating a mega-trade agreement with countries whose domestic markets are reduced, with few alternatives from the point of view of their economic growth policies, except the production for foreign markets — a situation that is diametrically opposed to that of Brazil, which has a vast and coveted domestic market.

With regard to Brazil, its possible adherence to mega-trade agreements brings to the debate the discussion of the flexibility of its labor laws, the impact of international competition on the various industrial segments in Brazil and the loss of market for the Brazilian manufactured goods in Latin America, especially in South America. In addition, the exchange rate issue is a central — though little discussed — variable in this process. What would be the impact of an agreement of this magnitude on a context of overvaluation of the real on the national economy as a whole?

In this sense, the main question to be answered is whether the country is able to engage itself into international trade via adherence to mega-trade agreements. Further questions regard the national entrepreneurs’ cohesion around a national policy regarding the commercial insertion of Brazil, which traditionally includes, for example, federal subsidies, openly countered in international trade.

It is clear, therefore, that Brazil’s adherence to a wide range of trade agreements involves, among other arguments, the reevaluation of its domestic and external priorities. Domestically, the impact of these agreements on the country’s external accounts, on the political friction among different business groups with conflicting interests in the implementation of the country’s foreign policy and on the interests of workers and consumers is noteworthy. Internationally, Brazil seeks a compromise with Argentina in order to reach a trade agreement with the European Union without jeopardizing its goals related to Mercosur and South America, a strategic area of influence within its foreign affairs.

Countries with which Brazil maintains preferential trade agreements

SOURCE: BRAZIL. Ministério do Desenvolvimento, Indústria e Comércio Exterior (MDIC). Acordos dos quais o Brasil é parte. Retrieved from < http://mdic.gov.br//sitio/interna/interna.php?area=5&menu=405 > on Mar. 30, 2016.

[1] ORGANIZACIÓN MUNDIAL DEL COMERCIO.  La OMC y los acuerdos comerciales preferenciales: de la coexistencia a la coherencia. Informe sobre el Comercio Mundial 2011, Ginebra, 2011.  Retrieved from <https://www.wto.org/spanish/res_s/booksp_s/anrep_s/world_trade_report11_s.pdf> on  Mar. 9, 2016.

[2] THORTENSEN, V.; FERRAZ, L. O isolamento do Brasil em relação aos acordos e mega-acordos comerciais. Boletim de Economia e Política Internacional, Brasília, n. 16, p. 5-17, jan./abr. 2014. Retrieved from on Mar. 10, 2016.