RIO DE JANEIRO, Nov. 29 (UPI) -- The U.S. proposal this week to end tariffs around the world on manufactured goods by 2015 has been met with suspicion in Brazil, perhaps the developing world's most vocal opponent of U.S. trade policy.
Economists and government officials called the U.S. proposal unrealistic and hypocritical, given the U.S. stance on trade in agriculture, the area where Brazil -- and most of the developing world -- can best compete.
"Tariffs are not the problem. I think Brazilian industry in general agrees with the implementation of opening markets," said Ivoncy Ioschpe, president of the Institute for the Study of Industrial Development, an industry-funded think tank in Sao Paulo.
"The problems are the subsidies on the agricultural business and the subsidies on the steel industry in the U.S. These are big issues, and the proposal of Mr. Bush doesn't talk about this."
Earlier this week, U.S. Trade Representative Robert Zoellick unveiled the plan, which will be formally submitted to the World Trade Organization next week in Geneva.
The plan is part of a growing list of reforms proposed by the Bush administration in the continuing Doha round of WTO talks. It seeks to cut to 8 percent by 2010 the tariffs on manufactured goods worldwide and eliminate them five years later.
Developing nations such as Brazil and India, which have higher tariffs on manufactured goods, oppose the measures, saying their industries still need protection from foreign competition.
John Williamson, the American economist who a decade ago coined the phrase "Washington Consensus" to sum up reforms being followed in Latin America, said he doesn't think the latest U.S. proposal will be accepted in the developing world.
"My own view is that there is zero chance of Brazil accepting the Bush proposal," he told United Press International this week.
"Brazil badly wants market access in agricultural goods. To give up its bargaining counter before getting it would be foolish. Brazilian negotiators weren't born yesterday."
But C. Fred Bergsten, director of the Washington-based International Institute for Economics, where Williamson is a senior fellow, said that the developing world is going to have to deal with the U.S. proposal.
"(Brazil) should bargain hard for its interests and agree only if the deal is a net gain for it," Bergsten said. "Our studies show U.S.-Brazil trade could double or triple very quickly with major two-way liberalization."
The developing world, Bergsten said, will certainly be asking for concessions in return for accepting the U.S. proposal.
When asked if this latest U.S. proposal would reduce political pressure on the United States over its agricultural trade policy, Bergsten said both types of trade would have to be liberalized together.
Brazilian negotiators would like to see this happen but doubt that it will.
This year alone, the United States has hiked tariffs on steel by up to 30 percent and passed a $190 billion farm subsidy bill. Both actions enraged Brazil -- and the rest of the developing world.
Ioschpe spoke for many in Brazil when he said that those acts indicated there was no way for countries dependent on farm or raw goods to win with the United States, largely because of the wide support such moves receive in Congress.
"I don't know if Mr. Bush has the power to deal with these problems," Ioschpe said. "The American Congress has the power in dealing with the protections that America has today."
But Bergsten, writing in the most recent issue of the journal Foreign Affairs, pointed out that the protectionist moves by the Bush administration were simply political balm.
They allowed, he wrote, for Bush to win congressional approval of Trade Promotion Authority, a potent tool that will allow for far-reaching trade pacts around the globe.
That has had little effect in soothing the ruffled feathers in Brazil, where the U.S. proposal on ending tariffs is seen by many as a prime example of American unilateralism.
"The strategy highlights the negotiating tactics of the United States: quite aggressive and which attend exclusively to its own interests," Luiz Felipe Seixas Correa, chief of the Brazilian mission to the WTO, said this week. He also mentioned the farm subsidies.
But U.S. officials counter that high farm subsidies worldwide are to be blamed on the European Union, where such programs are three times larger than they are in the United States. And U.S. negotiators say they are seeking a sharp cut in farm subsidies, through the WTO. They claim that the United States has kept its protection high in response to Europe.
Rubens Barbosa, the Brazilian ambassador to the United States, told the Brazilian press this week that the U.S. farm proposal before the WTO reveals a hypocritical policy when contrasted with the call for the abolishment of tariffs in the manufacturing sector.
"In the agricultural proposal, they suggested the end of subsidies, but they foresaw the maintenance of tariffs of up to 25 percent. It so happens that, in the industrial section, there are practically no longer subsidies, nor tariffs as they exist in the agricultural area."
In other words, Barbosa said, in the sectors of trade where the United States has less protection -- manufacturing -- it wants to see steep cuts in tariffs. The United States and the rest of the developed world are confident their industries can withstand competition.
Yet in the area where the United States is well protected -- agriculture -- it envisions tariffs remaining high. It is here that a country like Brazil, with its strong agricultural sector, can make inroads in foreign markets.
"This strategy shows that they want to move like a tractor" through world trade negotiations, Marcos Jank, a researcher in trade integration for the Inter-American Development Bank, told the business newspaper Valor.
"There is a profound inequality between the conversations over agriculture and industry," he said.
The editorial board of Valor itself made the Brazilian case against the latest U.S. moves on tariffs in Thursday editions.
"The proposal by the United States ... is clearly unrealistic and it cannot be taken seriously as a suggestion capable of being discussed by the member countries (of the WTO)," it said.
"The proposal doesn't take into consideration the fact that, if accepted, it would make unfeasible the possibility that developing nations could continue to grow in their industrial sectors."
