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Interview by Pedro Motta Veiga to Nexo about the study “Food Diplomacy”, which shows the international scenario for regulating food production and trade today

In the interview, the researcher talks about the results of the work “Food Diplomacy. What is Brazil’s appetite in the world scenario? “The international regulation of food production and trade: participation and positioning of Brazil” launched in the beginning of April, on an online seminar, with the participation of specialists.

To watch the video, with the full seminar click here (only in portuguese).

INTERVIEW

WHAT IS THE SCENARIO FOR THE FOOD MARKET REGULATION

By Marcelo Roubicek

‘Nexo’ spoke with the researcher Pedro da Motta Veiga to understand the production and trade of food in Brazil and worldwide

A research conceived by Instituto Escolhas – a civil association that operates in the sustainability field – and carried out by the Cindes (Center for Integration and Development Studies) shows the international scenario of food production and trade regulation nowadays. The study outlined the market scenario and identified its main agencies, actors and agendas. The research shall be launched at an online seminar (http://www.escolhas.org/emum-momento-que-producao-e-ocomercio-de-alimentos-sofremefeitos-do-coronavirus-eimpactos-nas-exportacoesseminario-online-debatediplomacia-alimentar/) held by Instituto Escolhas and Nexo. The event, which shall count with the participation of Nexo, Cindes researchers and agribusiness experts, takes place on April 2, 2020, from 9:00 a.m. to 11:00 a.m., with internet transmission (https://youtu.be/ZCxxBEPlWaU ).

Nexo had access to the study and talked with Pedro da Motta Veiga, researcher and director of Cindes, to understand how is the international scenario of regulation of this market and the role played by Brazil.

How has the regulation of international food trade evolved over time?

Pedro da Motta Veiga – The international market for agricultural products – especially food – has always been quite regulated.Agriculture has always received, within the boundaries of the regulation of international trade, a very specific treatment, because countries have always associated agriculture with other concerns, such as food security, in order to have the products for feeding their population.

From a moment on, some countries began to associate the protection of agriculture with the subject of the environment.For some time now, compared to the treatment given by the regulation of international trade to industry, agriculture is treated in a special manner.Using a more trivial expression: with much more care and protection than the industry.

When we followed the various rounds of negotiation of GATT [General Agreement on Tariffs and Trade, established in the 1940s and succeeded by the World Trade Organization], agriculture only entered the GATT agenda in 1986, in the Uruguay round.

The industry had already entered the GATT agenda since the end of World War II (1939-1945), when the body was created.

If you look at the trade agreements that we call preferential – most of the time bilateral ones – also: agriculture usually has a special treatment, more careful, so to speak. More protectionist in relation to free trade objectives.Agriculture often comes in with one foot in free trade and one foot off.

When we come to a more recent period, to the present time, we observe that this scenario of more protectionist regulation continues. But a set of new regulations that appear not in the form of customs tariffs or traditional barriers to trade have joined it, but in the form of sanitary measures, technical barriers to trade, measures inspired by environmental concerns. How the product I am importing is produced? How does its production affect the environment?

Today, how are the rules for food production and trade defined? Which are the main criteria used?

Pedro da Motta Veiga – There are two new features in this most recent trend. One is that you have new layers of trade regulation. It’s very easy to say that they are merely protectionist, but I don’t think they are. They can be used in a protectionist manner, there is no doubt. But they often have a concern for the environment, the health of food – the sanitary quality of food – and things like that. These are legitimate concerns.

The first characteristic is this. They arise from concerns that are not just commercial. They are environmental, climatic, health related, human and animal health concerned. In this respect, the format of regulation is not exactly creating a barrier: it is to create requirements, attributes that products must have to meet certain requirements.

The second novelty is that often these new regulations refer not only to product attributes, to the quality that the product should have, but to the production process. That is, how that product was produced. So if a product meets the quality requirements, but at the same time it is known that it was produced by deforestation, it may not meet the final requirements.

To summarize a little: the regulation of agriculture and agricultural trade becomes much more complex in the sense that, in fact, it starts to mobilize concerns that previously did not affect agricultural trade so much. It also starts to look at the conditions in which these products are generated.

What is Brazil’s position today in the international food market? Has it undergone transformations over the past few years?

Pedro da Motta Veiga – Looking at the beginning of the 1990s, Brazilian agriculture was very concerned about the creation of Mercosur, because Argentina and Uruguay were agricultural producers and could “invade” the Brazilian market. At that time, we had an agriculture that was still inefficient, concerned with competition in the domestic market. That changes a lot throughout the 1990s.

You have effects of Embrapa’s research on production here, enabling productions that were considered impossible. There was also the deregulation of the agricultural market. Brazil was the country where each agricultural sector (coffee, cocoa and others) had a body that protected the production of that. This is all eliminated in the early 1990s. The result of this set of changes is that Brazil, at the end of the 1990s, began to become a major exporter of agricultural products.

From then on, what was important for the agricultural sector was the emergence of China and Asia more generally, which represented a monumental increase in international demand for agricultural products that Brazil produced (and also iron ore). It was a period of commodity boom, which marked the first decade of this century and is characterized by this price increase driven by the growth in demand.

And as a representative of this highly competitive exporting sector that Brazil formulates its official positions in the bodies where the regulation of international trade is produced. Both in the bodies where the regulation is produced and in the commercial negotiation bodies. Brazil’s position in these agencies is essentially a position to defend the interests of the Brazilian agro-export sector. And that’s normal.

And how exactly does Brazil act in the international context to defend the interests of its agro-export sector?

Pedro da Motta Veiga – Brazil acts fighting for the elimination or reduction of policies of other countries that, in a view of the export sector, distort [the market]. That block exports and allow exports from other countries, which are only viable by means of subsidies, to compete with Brazilian production. To a large extent, this attitude of Brazil appears in the WTO [World Trade Organization]. Brazil tries to reduce barriers to its exports and tries to get other countries to reduce subsidies on production and, indirectly, on exports.

In this discussion about sanitary measures and requirements regarding product labeling, Brazil is always keeping an eye on its protectionist potential.

This comes largely from the European Union. Brazil and other agricultural exporters – Argentina, Australia, Canada, USA – are always watching: any proposal coming from Europe is viewed with suspicion, because there is a suspicion that they are wanting to put in place a technical standard that actually limits the exports from these countries to Europe. And a standard that is little for the domestic producers of Europe.

This [the new regulatory agenda] is a new scenario that poses new challenges for those who are producers of agricultural goods. It also poses new challenges especially for Brazil, which is the world’s third largest exporter of agricultural and food products. It is a new agenda that the country has to face. And It seems to me that there is no point in reducing the emergence of this new agenda to something that is seen only as protectionism. Of course, there is always that, let’s not be innocent. There’s a lot more than that. And if you treat it like that, you will miss the approach of this new agenda.

In this respect, how we define what protectionism is?

Pedro da Motta Veiga – There is not a precise line to say what protectionism is and what is not. You have to look on a case-by-case basis. One important thing in this discussion is whether the measures that are taken apply to both European imports and European domestic production. It is difficult to characterize this as protectionism. Is the European Commission also imposing on its producers the same it is imposing on Brazilian producers exporting to Europe? This is usually used as a criterion for evaluation. If the requirement is only imposed on imports, they are discriminating against them, why do they not apply to their producers as well?

Even though it is not protectionist, it [the regulation] can have an impact on the countries that export. Because even if the measure is imposed on both European producers and imports, it may be easier for Europeans to comply with it than for exporters of the product to Europe. Thus, although not legally protectionist, it can have a protectionist effect.

It is a complex picture. There is not a division line to explain is protectionism is and what is not. There is no point in calling everything protectionism, because it is not. Countries have preferences. Europe has a tradition of precautionary preference against risks. The USA is a country where capitalism works with the most risk. You cannot look at this new picture of regulation of the agricultural trade only with those eyes. And, in a certain manner, we can question whether Brazil does not look much from this perspective, from this concern with protectionism. It is a question that we can legitimately ask. Is it effective to address this complex new picture – where the demands for food quality come from consumers, retailers, distributors – as a major plot and protectionist agency? Is that the good way to look at this? It seems to me, even from a business perspective, inefficient.

And in the Brazilian internal context? What is the scenario regarding the regulation of food production and exportation?

Pedro da Motta Veiga –  We have two main concerns. One with the issue of animal and plant health (especially animal). In recent years we have had some episodes such as “Operation Weak Meat” (Operação Carne Fraca), which evidenced fraud schemes for the inspection of products that were exported. This has a devastating effect on the image, on the country’s position on the international stage. Then there is the issue of plant and animal health that Brazil has to look closely at.

And there is also the question of how we treat the environment. This issue of deforestation, to what extent the expansion of exportable agricultural production conflicts with environmental preservation objectives and climate objectives. We have to look at this carefully. There is no point in treating this concern of European countries as a protectionist concern only.

There is a global concern about the environmental and climate issue. Any evidence that Brazil is disregarding this generates reactions. I am not even getting into that discussion. But of course, when there is room for criticism, people will criticize – both protectionists and non-protectionists. And you strengthen the protectionist point.

And I think that even today the agricultural sector has not given an adequate response to this. China is not so demanding and concerned about the environmental issue. “Can you sell to China without much demand?

Alright then”. This is, in a way, the reasoning of the producers.

It is important to try to understand this better, which are the sectors and interests that push the agro-export sector towards a greater compliance, with the new forms of regulation and the new international regulation agenda, and which are the sectors that go in the opposite direction and reject this concern.

What is the role of society in the food market regulation? How do groups like NGOs and social movements act?

Pedro da Motta Veiga – This is mainly an European thing, as regards food and agriculture. You have a large participation, an important thing, which are voluntary certifications or private standards. These are things that are not imposed by governments, they are initiatives from NGOs or NGOs combined with retailers (supermarkets). They create a certification system that defines criteria and standards that are not imposed on anyone, but to which producers can associate, provided that they demonstrate that they meet these criteria and standards. Eventually, there are certain retailers that only buy products from producers that meet certain requirements and are certified. This is an interesting process.

In Brazil you have, for example, in the soybean sector, a very interesting experience that is the soybean moratorium. The soybean moratorium dates back to 2006 and was renewed. It is a commitment of soybean processing and exporting companies not to buy soybeans from deforestation. The government at other times was close to that, joined the efforts. It has become a very successful case of public-private articulation around sustainable soybean production for export.

There is a certification system in the sugar and alcohol sector worldwide called Bonsucro. It also establishes environmental, labor and social criteria that companies have to comply with in order to be certified. And many people only buy a product if it is certified by Bonsucro. Bonsucro is an international initiative that certifies people in India, Australia, South Africa, where there are people who produce sugar cane and alcohol. But the crown jewel is Brazil, where the vast majority of certified plants in the world are located.

These are interesting initiatives that reflect the interests of companies themselves, NGOs, civil society, consumer entities. They show an interest in participating in this matter of regulation, and are things that can open up even more in the coming years.

If you think that 50 years ago we had almost nothing like international trade regulation, and since then we have the entry of these regulatory mechanisms – which are health measures, labelling requirements and other technical measures. There are standards based on the environmental and climate issue.

There are standards that have no origin in governments or in international negotiations, but in the formation of groups and coalitions in the developed countries, which involve NGOs, consumer associations and companies.

So there is a much more complex scenario, with many more layers of regulation, much more actors. And Brazil has to prepare as a major exporter of agricultural products to deal with it.

What are the perspectives for the food regulatory scenario in Brazil?                                                                                

Pedro da Motta Veiga – I think Brazil has this kind of concern, at least in terms of animal and plant health. Brazil has an important international participation.

The question is whether Brazil is today, with its attitudes, being able to refine the vision in relation to this regulation, going beyond the position that says that exporting countries are liberal and importing countries are protectionist because they have less market opening. I think that the world of agricultural regulation today has much more than this opposition.

Link to the interview originally published on Nexo website.  Click here.