(EU) and the Common Market of the South (MERCOSUR)? - FDCL

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104 4.3 Brazil, foreign direct investment in GATS-2000 and the demands of the European Commission In the negotiations on services the Brazilian side and the EU-commission agree on their definitions of services, in analogy to the four kinds of GATS, where the topic of investment as Mode 3 includes the treatment of foreign branches of service companies. 303 But regardless of the existing relatively lax legislation which Brazil imposes on foreign investors, the European Commission in its “GATS-Requests” in the framework of GATS-2000 has demanded far reaching liberalization measures for investment in the area of services. 304 Even if the European Commission has explicitly asserted in the introductory text to the GATS-2000 Request from the EC and its Member States (hereafter the EC) to Brazil that: “the EC is not seeking the dismantling of public services nor the privatization of state owned companies”, 305 as the procurement of public goods is not to be abolished, but to be commercialized and opened up to foreign corporations, especially European ones. The GATS with its broad regulatory framework concerning liberalization is to guarantee this. And in any case Brazil will have to continue to privatize state enterprises due to the pressure of the IMF and the practical constraints resulting from its debt-trap. 306 According to the contract made by the former government FHC with the IMF, which gives way for new credit lines up to 30 billion US-dollars, and which has been renewed under the same conditions by the Lula-government, Brazil has to reach an annual primary budget surplus of 4.25%: The politically controlled component of the Lula-government, from a macroeconomic point of view, consists of making cuts to the government budget, that is to cut state spending at a high social cost, 307 as well as the obligation to generate currency earnings through exports, and finally to 303 See Maria Silvia Portella de Castro: Mercosul e União Européia: relações econômicas e comercias e as negociações do Acordo de Cooperação Inter-Regional, January 2003, p. 35. 304 There are no details available on the requests of the European Commission to Brazil and the MERCOSUR within the framework of the negotiations on the “association treaty”, except for the avowal of the EU to treat the issue of “investment” in analogy to the Doha-agenda of the WTO. 305 GATS-2000 Request from the EC and its Member States (hereafter the EC) to Brazil, p. ii., http://www.gatswatch.org/ docs/offreq/EUrequests/Brazil.pdf. 306 See the IMF website at: http://www.imf.org/external/np/loi/2003/bra/04/index.htm: “Brazil - Letter of Intent”, November 21, 2003: “This Letter of Intent of the government of Brazil describes the policies that Brazil intends to implement in the context of its request for financial support from the IMF.” 307 See: PAULO NOGUEIRA BATISTA JR. (USP / FGV-EAESP): DIRETO AO PONTO, in: Agência Carta Maior, December 16, 2003: “O superávit primário passou de 3,5% do PIB em 2000 para 3,6% em 2001, 4% em 2002 e 4,3% em 2003.” Own translation: “The primary surplus rose from 3.5% of GDP in 2000 to 3.6% in 2001, 4% in 2002 and 4.3% in 2003.”
e able to pay the interest on the foreign debt 308 and to continue to privatize stateowned companies. This means that the maximum market solution does not have to be demanded in every single treaty or agreement- due to the interaction of the various institutions and international trade agreements, this creates an explosive mix. The GATS-2000 Requests of the European Commission try to approach the topic from other perspectives: The European Commission, for example, is trying to restrain the rights of the Brazilian Central Bank to control and regulate the crossboarder flows of capital and currencies [Author's note: In the following quote the first phrase represents the Brazilian negotiation position, starting with “EC Request” the demands of the European Commission are stated.]: “The Central Bank establishes procedures related to remittances and transfer of funds abroad. EC Request: Clarification of the horizontal commitment is requested. If the term “procedures” comprises any kind of restriction, it should be eliminated on the grounds that it was not scheduled.” 309 If the financial crises of the “emerging countries” should repeat themselves, the hands of the Brazilian government would be tied by the international treaty. They would not be able to implement short-term tools to influence or control its development, which are currently still allowed by the Brazilian Constitution: the market would be left to resolve the problem. The European Commission also wants to abolish Brazilian legislation which refers to the establishment or settlement of a company according to the principle of sole proprietor and partnership: 308 In questions of debt and interest payment the same principle applies to the Lula-government as to the Cardoso government. See: BBC Mundo: Economista critica pressão externa por mais exportações, citing Werner Baer, professor of the University of Illinois: “Mas, à medida que os Estados Unidos, a Europa e o FMI forçam o Brasil a manter em dia o serviço da dívida externa, eles forçam o governo brasileiro, indiretamente, a enfatizar o crescimento das exportações [...] Sem essa pressão, ou se fosse perdoada parte da dívida externa, isso também diminuiria a pressão sobre o governo de enfatizar o setor externo e ele poderia aumentar as despesas internas para melhorar a situação dos pobres.” http://www.bbc.co.uk/portuguese/noticias/2002/021004_baerrg.shtml. Own translation: “Furthermore, if the United States, Europe or the IMF force Brazil to be up to date with the foreign debt payment, they are forcing the Brazilian government indirectly, to emphasize export growth [...] Without this pressure, or if a part of the foreign debt was to be pardoned, this would also take pressure from the government to emphasize the external sector and this could make possible a rise in internal spending to improve the situation of the poor.” 309 GATS 2000. Request from the EC and its Member States (hereafter the EC) to Brazil, see: http://www.gatswatch.org/ docs/offreq/EUrequests/Brazil.pdf. 105
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Christian Russau Enforcement of int
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Preface Since the end of 1999 the C
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If the “Interregional Association
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8 Chapter 5: The enforcement of int
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10 1.1 Negotiations of the “Inter
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12 A similar agreement of the so-ca
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14 tute in the eyes of many countri
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16 amaraty, where the FTAA-negotiat
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18 free trade agreement between the
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20 at the UN Millenium Summit to ha
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22 on the possibility of a unilater
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24 tual contradictions between the
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26 fired. The workers union OGB-L,
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28 policy and EU development policy
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Chapter 2: Foreign direct investmen
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50% in 2002 as compared to the prev
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The reasons for propagating this co
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• according to a study conducted
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promotion of domestic demand, in or
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2.2 International Agreements and Tr
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2.3 The World Trade Organization WT
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• trade and investment • compet
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2.3.3 The GATS agreement The Genera
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which works on a profit-basis, sees
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“deadline: by 1 January 2005”.
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(EU) and the Common Market of the South (MERCOSUR)? - FDCL

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