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

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78 But not only international law or internal company codes of conduct oblige VW to respect fundamental labor norms. In addition Brazilian law, according to article 9 of the Brazilian Constitution, there is the obligation not to hinder the right to strike. 216 The pressure of Unions and Brazilian Labor courts, which insisted on abidance by the law, finally led to an agreement between the union and the corporation, which was supported by 75 percent of the 13,000 employees from the plant in question, to cut 1,923 jobs in exchange for severance payments. 217 – This unfavorable interlude, with respect to shareholder value (see the consolidated balance sheet), will surely play an important role, in terms of the global bargaining power for investment locations and advantages and disadvantages of locations in the next corporate decisions of the Wolfsburg board of directors: in other countries abroad this “disadvantage of location” concerning labor laws and the degree of union organization would not exist. German companies were only marginally involved in the privatizations of former state enterprises in Brazil during the nineties. Other European corporations, led by Spanish companies, were large-scale participants of this wave of privatizations, which occurred as a result of the IMF conditions placed on Brazil, one of their major debtors. The share of foreign capital among the Top-500 Brazilian firms rose from 31 percent in 1991 to 45.8 percent in 2001. 218 At the same time as a consequence of privatizations of state enterprises the state’s participation in the top-500 Brazilian companies fell from 26.6 to 19.7 percent. The countries of origin of the FDI inflows in the case of privatizations were the U.S.A. (16,5%), Spain (14,9%), Portugal (5,7%) and Italy (3,1%). 219 From the perspective of the countries of origin, Portugal maintains the top position with respect to the relative importance of its investment in Brazil: Portugal’s FDI flows to Brazil amounted to 15 billion US-dollars over the last 5 years, accounting for approximately 60% of Portuguese FDI –outflows, 220 a circumstance which might refer to the strong mutual dependency between Brazil and Portugal. The European FDI stock in Brazil amounted to 76.8 billion Euros in 2001. 221 Before the big wave of privatization in the middle of the nineties the capital and production intense automobile sector was leading in foreign investment, until the 216 “Art.9.: É assegurado o direito de greve, competindo aos trabalhadores decidir sobre a oportunidade de exercê-lo e sobre os interesses que devam por meio dele defender.” CONSTITUIÇÃO DA REPÚBLICA FEDERATIVA DO BRASIL. Translation: “Article 9: The right to strike is guaranteed, it being the competence of the workers to decide on the advisability of exercising it and on the interests to be defended thereby.” 217 http://www.ftd.de/ub/in/1065243029175.html?nv=se. 218 http://www.estado.estadao.com.br/editorias/2003/07/14/eco038.html. 219 http://www.estado.estadao.com.br/editorias/2003/07/14/eco038.html. 220 http://www.radiobras.gov.br/materia.phtml?materia=136662&editoria=EC. 221 DG Trade A2/CG/SG/WB, Brussels, June 2003.
neoliberal privatization, especially of the telecommunication and banking sectors, had produced a move from production intensive sectors to the services sector. In Brazil from 1991 to 2002 “only 0.1% of revenues from privatization (which totaled 42 billion US-dollars) came from German firms.” 222 This rise in FDI in Brazil, however, has not produced any impact on development, but to the contrary: According to a Unicamp study in 1997, around 95 percent of FDI occurred in the area of M&A and thereby had no impact on job creation 223 and only five percent was categorized as Greenfield Investment. 224 In general terms the strategic orientation of FDI in Brazil– focussed on the internal markets of Brazil or MERCOSUR, and thereby not on exports to the world market - had not changed until the end of the nineties. 225 At first glance one might get the impression, that through the relatively high FDI inflows from 1998 to 2000 into the privatized service sector, like telecommunications and banking, nothing has changed with this scenario of orientation towards the internal market. But for an economy like the Brazilian one it is macroeconomically essential to get FDI into the country with the hope that this might stimulate the internal market. But the economy is forced by market logic to use these FDI –flows, above all, in order to attract additional foreign currency – and this is mainly through exports. This picture might change, but the exact course is currently hard to predict. A trend in this direction, however, is very likely to occur as not only the foreign corporations which operate in MERCOSUR are interested in profits and comparative cost advantages – which is often labeled with the nice term “efficiency seeking”, but also the four MERCOSUR governments are very keen to obtain export surpluses in order to avoid strong disequilibria in the balance of payments and to avoid new financial crises. And in this sense both governments and corporations – in this case hand in hand – would welcome a free trade agreement – the only question seems to be the details of this agreement. The different interests of the participants on both sides of the Atlantic related to the rapid conclusion of an “Interregional Association Agree- 222 Peter Rösler: Ausländische Direktinvestitionen in Lateinamerika, Ibero-Amerika Verein der Deutschen Wirtschaft, July 30, 2003. 223 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. 13-14. 224 Folha de São Paulo, June 4,1999, cited in: 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. 13. 225 See, e.g.: Jost, Thomas / Nunnenkamp, Peter: Bestimmungsgründe deutscher Direktinvestitionen in Entwicklungsund Reformländern - Hat sich wirklich etwas verändert?, Kiel Working Paper No.1124, August 2002; or: Peter Nunnenkamp: Foreign Direct Investment in MERCOSUR: The Strategies of European Investors, in: Paolo Giordano - Chaire MERCOSUR de Sciences Po [edit.]: An Integrated Approach to the European Union - MERCOSUR Association, 2002. 79
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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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130 um den Markt der wiederentdeckt
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134 DIHK Deutscher Industrie- und H
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