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Brazil Tells Us: How to Protect Our Weakness in Economic Development
http://www.sina.com.cn 2002/06/18 11:07  中国周刊

  Brazil, as a great developing country,signed the agreement on and became one of the thirty-one original signatory countries of GATT more than thirty years ago. What benefit has Brazil obtained from the preference offered to developing countries by GATT? What effect on earth did GATT take on the economy of Brazil?

  First, let'S have a review on the development of Brazilian economy in the dozens of years.

  Brazil is a developing capitalist nation and one of the economically comparatively developed countries among developing countries. Since 1930 when the bourgeoisie camesintospower and carried out industrial revolution, especially after the World War II, the economy of Brazil has developed at a high speed and it has changed from a single agricultural country to a middle-developed industrial country. Now according to the gross domestic product (GDP), Brazil has already ranked the eighth in capitalist world. The GDP of Brazil increased 64% on the average per year, to which the industrial sector contributes 8.3%, agricultural sector contributes 4.1%, communication and transportation sector does 7.4 % and commercial sector does 6.7%.

  The economic development has advanced the trade structure, which has become important symbol of Brazilian economic development. For hundreds of years, the economic pattern of Brazil has been led by the export of raw materials composing of few agricultural and mineral products. Until 1952, the export of coffee still entrenched 73.7% of the total export of Brazil and the exports of industrial goods only held 1.2%. In 1979,the exports of industrial goods began to exceed the raw products, up to 52.5 % and then above 60% after 1981. Presently, Brazil is able to export small-scale equipment kit, which showed that Brazil forwards to be an industrial export state. The alteration of import structure was evidenced by the imports of industrial goods continuously increased from half of the total import figures in 1950s to about 60% in 1970s.

  Accompanying the alteration of the trade structure, the total volume of trade changed greatly too. The total export volume of Brazil was US.3 billion and the total import volume is US.9 billion in 1964. Its total export volume hit US billion and the total import volume US.9 billion in 1973.

  Thus it can be seen that the economy of Brazil has developed rapidly and the external trade has also improved constantly in the postwar decades (equal to the years of enteringsintosthe GATT). There are a variety of reasons for the result, but obviously, as a member of GATT, Brazil enjoyed the benefit of tariff reduction and reciprocal policy, which played an important part in economic development. However, just as a proverb said, "A loss may turn out to be a gain."?May a gain turn out to be a loss vice versa? Although Brazil has benefits to some extent by the accessionsintosGATT, just as a Brazilian expert said, "Insgroupsto realize the external trade liberalization, the developing country like Brazil opened domestic market to other countries and thereupon paid a great deal of expense."?Therefore the particular benefits gained from GATT are limited because of Brazil'S developing country condition.

  The aim of GATT was to restrict retaliatory measures and protective measures by tariff and domestic allowance reduction, in other word, was to contribute a good environment by MTN (multilateral trade negotiations) to promote the trade liberalization to even larger extent. Brazil, as a country featuring with multiplex import and export, was very interested in enteringsintosGATT. It seemed that GATT was the best and probably the only way for Brazil to fight with developed countries against a tendency towards protectionism in developed countries. However, when it strived to attain the liberalization of trade at high expenses so as to become a member of GATT, how much the so-called preference rendered to developing countries did Brazil gain from the organization?

  (1) The textile products always accounted for a large amount of export products of Brazil. In 1965, about its one-third of exports were textile products. And in fact, since 1955, the developed countries led by the United States have established the quota restriction against the textile products imported from developing countries. In 1959, the United States submitted an issue aimed at textile products, "automatic export quota",? to GATT agenda and requested each signatory country voluntarily put these restrictionssintospractice. The efforts weren't successful. Till 1973, GATT eventually established "Multilateral Fiber Agreement" (MFA) in accordance with the above-mentioned intentions and launched the export quote restriction to wool and synthetic textile products. The MFA renovated a regular schedule following the same principles and generally the restriction was more and more rigid. Nonetheless, The European Economic Commission has been always putting the restrictionsintospractice since 1976. Therefore, the textile export of Brazil was restricted rigidly.

  (2) Another leading export of Brazil was agricultural products such as coffee, cocoa, soybean, fruit juice, sucrose; tobacco, etc. Nevertheless, agricultural products hadn't been included in GATT'S discussion for many years so that it resulted in the common agriculture policy of European Economic Community (E.E.C), the United States agricultural remission of 1955 and other serious trade protection measures. E.C.C provided a number of subsidies to farmers, while the United States had the remissible right not to execute GATT stipulations on agriculture. According to statistics, the total volumes of direct subsidies on agricultural products provided by America and E.E.C every year were approximately 300 billion dollars. It was evident that such subsidies had hurt export seriously, and the benefit of farmers of E.E.C from the help of government was to occupy the Brazilian traditional export market--the third party market. Frozen chicken, soybean, orange, beef and sugar were all the fortes of Brazil, but now the production of these goods has been harmed directly by subsidy policy. It went without saying that besides businessmen and investors, many farmers, shipbuilders, drivers and the departments relating to agricultural products faced serious threat from the subsidy policy. Although the European countries have recently made a statement to reduce some subsidies to domestic producers publicly, but neither did this concession reduce actuall export subsidies, nor were the foreign products admittedsintosthe European market. Brazil didn't obtain any benefit from it.

  (3) It was basically considered in GATT that subsidy was an unfair trade behavior. Up to now, many countries including developing countries have always been trying to get special attention from which they can decrease the extent of damage subject to the retaliatory measures. But this was a delicate problem that some sectors of developed countries, such as the United States?steel industry, were apparently losing their competitive edge and then they compel American government to take strong measures against GATT'S regulations to protect them. Hence, the export to US from Brazil was injured.

  (4) In spite of the special items on remitting tariff duties in GATT, the external trade statistical data of Brazil since 1984 showed the difficulties to benefit from remitting tariff duties according to the demands of GATT. About 77.3% of Brazilian export were composed of 42 different products, which were subject to protectionism measures in the developed countries and were faced with many non-tariff barriers (such as plant quarantine and agricultural subsidy policy of E.E.C,) insgroupsto attain more market shares. Generally speaking, the commodities whose tariff could be cut down were ones protected by other means, which made the negotiation on tariff remission less important than other current decisions against protectionism and subsidy. It was reported that the average tariff of industrial countries seemed very low (about 4% on a average in terms of records in 1984), yet in fact, it was doubtful whether the developing countries have benefited from this remission.

  (5) Recently, the economic development strategies of Brazil emphasized on their advantageous non-primary products to develop export-oriented economy and has gotten some achievements. However, the guarantee clauses of GATT had an unnecessary obstructive effect on Brazilian export of non-primary products. It also stipulated that member states could cease import under urgent circumstances to protect an importing country from probably serious damages or threats. Actually, since the foundation of GATT, the developed countries have tended to take the guarantee measures as tools against the increasing export of developing countries, especially finished products, so as to keep their domestic market out of the lash of developing countries?products, which they called low-cost products. Of course it included Brazil. Taking thissintosconsideration, it was showed especially that the capabilities of the export of finished and semi-finished products of Brazil were strengthened postwar compared with that of the US and that in the prewar years. At the same time, the US was trying its best to restrain the competition of the commodities produced by low-salary workers in developing countries with thosemanufactured by high-salary workers in America insgroupsto materialize its full-employment policy. So Brazil had to seek new markets in developing countries to expand the export of non-traditional products, which lowered the American status in Brazil external trade in the postwar years. In 1945, about 50% of Brazilian export flowed to America, which fell to 19.3% in 1979. And Brazil kept trade deficit to America for many years since 197




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