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Brazil Leads Davos ‘Refoundation’ of WTO

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The Brazilian government is preparing a bill to speed up the World Trade Organization (WTO) reform process and try to accommodate the interests of agricultural exporters and the demands of Donald Trump’s government.

Brazilian and foreign diplomats heard by the newspaper O Estado de S. Paulo want the World Economic Forum, which starts Monday in Davos, Switzerland, to be transformed into the scene of the beginning of the WTO’s re-founding, threatened to be marginalized by the US government.

The report found that Chancellor Ernesto Araujo is also organizing a meeting in Geneva at the end of the week with the aim of holding consultations with the ambassadors of the United States, the European Union, Japan and the main players in world trade.

Living the worst moment of its history, the WTO has come under direct questioning from the US government, which accuses it of being insufficient to curb China’s trade expansion.

Trump, in different speeches and initiatives, made it clear: either the entity changes or will be abandoned. In an attempt to avoid emptying the entity, the EU has rushed to come up with proposals in a debate with Americans, Canadians, and Japanese. One of the centers of the debate is the creation of rules to control China’s state support to sectors that have increasingly displaced foreign competitors.

During the G-20 summit in Buenos Aires (Argentina) in December, the political mandate was given to begin reviewing the WTO. Now in Davos, ministers will have the first opportunity to launch the work.

The Brazilian government was committed to the reform process. But until then, practically as an observer. Now diplomats have confirmed to the state that a government proposal is being drafted to circulate among other governments.

Over the weekend, the latest details were still being debated, and the government should hit the hammer soon. Davos, therefore, would be the first step in this new engagement. Araujo, in his inaugural speech, made it clear that he would be part of the process with “creativity” and engagement. Even without the top-level presence of the Trump government, the event will be attended by a Deputy US Trade Representative Dennis Shea.

In the middle of the week, the transformations to try to save the WTO will be debated in a panel on Wednesday (23), with the presence of Roberto Azevedo, director general of the entity. But on the 25th, the ministers of the main G-20 countries come together for what is being considered as the kickoff of the reform, which should take 18 months to occur.

The Brazilian government brings to the debate at least two aspects for the reform. The first is that, whatever the outcome of the process, the agricultural issues can not disappear. One of the arguments of the Americans is that the entity is “outdated” and therefore needs to address new issues such as digital commerce and investments. For Washington, these are the issues of the 21st-century.

The Itamaraty, however, refuses to leave agriculture and the distortions created by the subsidies as a “20th-century subject”. A Brazilian diplomat still mocked the WTO reform agenda in a conversation with an Asian ambassador. His idea: export agricultural products by Amazon, without taxes, without taxes, which led the foreign diplomat to deny such a possibility.