“Each government demands free trade, but applies protectionism at its own market”

…This appreciation was shared by the 6 economy experts from Brazil, Argentina and Mexico with Hosuk Lee-Makiyama, Director of the European Center for International Political Economy in Brussels. – The economic situation in the emerging countries and their respective local currency crisis at the exchange market caused a broad public debate worldwide in the last months. Simultaneously, the upcoming negotiations concerning the Transatlantic Trade and Investment Partnership (TTIP) are critically discussed precisely in Germany, also attentively followed on the American continent. At present, global trade and the international economic system are issues intensely criticized. Politicians and social decision-makers do not take free trade and open markets for granted any longer, as they used to 10 years ago.

The European Commission in Brussels

The European Commission in Brussels

Considering this scenario, 6 economy experts from Latin America traveled to Brussels and the Cologne/Bonn region. During their meetings in Brussels with representatives of the EU Commission and liberal European parliament members, they discussed about the European positions concerning the commercial relations with their respective countries, the upcoming negotiations about the free trade treaties between the EU and USA, Mercosur and Brazil, and also about an update for the 2002 free trade agreement with Mexico. The debate focused on questions concerning the access to the market for industrial and agricultural products, but also for services and participation regarding public contracts, as well as regulatory measures, such as food regulations, industrial standards and certificates of origin. And precisely considering the free transit of goods for international trade, it is extremely important to have standards as transparent and unified as possible. This is the only way to pursue true competition and a seamless market access. In addition, the issue regarding the “certificates of origin” becomes a problem with the current international production chains when agreeing on a bilateral free trade agreement. How can one presently establish whether a product has been really “made in Mexico”, if its production material, for example, is purchased in Asia or USA to manufacture a product in Mexico? Ricardo Sondermann, Director of the Instituto de Liberdade of Rio Grande do Sul, and Vice-President of the Chamber of Commerce of the federal state of Rio Grande do Sul, Brazil, emphasized that these regulations mean a significant setback for companies. “An expert lawyer in my company required 6 months to conduct a thorough study on the legal provisions and product materials of a final good, in order to prepare a statement regarding the legal, unimpeachable certificate of origin of a single product! Just figure out what this means for a company that has a wide range of products!

During the conversations held with liberal members of the European Parliament, the economy experts from Argentina, Brazil and Mexico exchanged insights, especially about the repercussions of the political evolution on the international markets. The meeting held with the Dutch member of the European Parliament and President of Liberal International, Hans van Baalen, focused on the current events in Ukraine and Crimea. “I am afraid that we are facing the beginning of a new cold war,” said van Baalen, showing his extreme concern about the scenario currently developing in Ukraine. A shared concern on the Crimea situation led to an alliance between the EU and USA. But this does not necessarily mean that negotiations on the expected free trade agreement between USA and the EU will advance more quickly. He worries about the repercussions of the crisis on the energy supply in the EU countries. In this regard, the members of the Latin American delegation stated that a very productive biofuel industry has emerged by now in their respective countries –particularly in Brazil– which, by means of an international energy market, could surely contribute to diversify the European energy market and reduce its dependence from Russia.

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Meetings in Brussels

During their visit to the Rhineland, the topic focused on the overall economic conditions for Latin American entrepreneurship. At the regional parliament of North Rhine-Westphalia in Düsseldorf, the group received information from the economic-political speaker of the state parliamentary bench of the Free Democratic Party (FDP), Dietmar Brockes, about North Rhine-Westphalia (NRW) as economic location and the country’s economic promotion. A conversation held with business representatives of Bayer in Leverkusen focused on the overall economic conditions for international companies in Latin America. This meeting also quickly evidenced that the traditional “tariff barriers” (customs) are no longer the key problem. The regulatory measures are precisely the main problem, such as the production guidelines for chemical and pharmaceutical products, which hinder the market access. Several Latin American governments increasingly tend to demand international companies to establish production segments in their countries, even in particular country regions. Bayer representatives stated that this is no problem at all, as long as it concerns distribution structures. But when the demands comprise the establishment of production segments at entrepreneurial unreasonable locations, this is no longer feasible. The delegates agreed upon this insight: Unfortunately, interventionist interferences and overwhelming bureaucracy are precisely common in Argentina, but also in Brazil. A personalized political style as well as widespread corruption and a judiciary system that is not quite independent, depict a problem for each entrepreneur and hinder the economic growth of their countries. But the delegates had also a request for their German peers in this regard. “Our countries are strongly afflicted by corruption. International companies should not support this practice. The Siemens corruption case should not occur again. By doing so, you could help us at least in some extent to build an honest culture of competitiveness”.

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With Dietmar Brockes in the Düsseldorf state parliament

In a public event held in Düsseldorf about the topic “Globalization under Pressure – the Future of the Economic Relations between Europe and the American Continent”, Alexander Graf Lambsdorff, President of the German liberals at the European Parliament and leading candidate for the upcoming European elections, pointed out as follows: Free trade does not destroy jobs. It facilitates technological change and progress – thereby wealth and poverty reduction. Manuel Molano, Director of the Mexican Institute for Competitiveness, complemented this statement: “Trade promotes development. We should rather focus our criticism on topics such as fight against corruption, transparency and competitiveness, or the granting of public contracts. These areas show deplorable conditions, detrimental for every entrepreneur, but also for each consumer and tax payer”.

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During the public event in Düsseldorf

by Birgit Lamm

 

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