Lula’s Indian dream, twelve years on

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Twelve years ago, on January 26th 2004, Brazil's President Lula met India's Prime Minister Atal Bihari Vajpayee in New Delhi and was the chief guest at India's Republic Day parade. The visit to India, Lula's 20th foreign trip since assuming the presidency a year earlier, powerfully symbolized his wish to strengthen relations between the world's two biggest democracies among developing nations. Lula took with him 100 businessmen and women from 78 different companies in an effort to expand bilateral trade, as well as Mercosur's Eduardo Duhalde, Paraguay's Foreign Minister, Brazilian ministers and the governors of Parana and Mato Grosso.

Both Brazil and India enjoyed considerable international momentum at the time. Their capacity to unite developing countries during the trade negotiations in Cancun in 2003 marked a fundamental change in the overall dynamics of multilateralism. Alden and Vieira wrote about the episode that “the unified stance of resistance shown in Cancun by major players in the developing world marked the beginning of a new era in the international relations of the third world.”

This had set off unprecedented behind-the-scenes diplomatic activity between Brazil and India. Cancun was immediately followed by the India visit of the Brazilian Foreign Minister, Celso Amorim, in October 2003. The Indian media was full of praise for Lula's seemingly natural appreciation of India's global role, and his talk of a "new trade geography" in the world. During interviews I have conducted in Delhi in the following years, Indian policy makers frequently marveled at the Brazilian president's informal and friendly demeanor during the visit. "It seemed as if he had been to India many times before", one said. 

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In what was seen as a crucial step at the time, India signed a Preferential Trade Agreement (PTA) with Mercosur. Lula described the accord as the first step towards future free trade and as the inauguration of a "new era in South-South cooperation". At the same time, he was eager to point out that his strategy to foster South-South ties should not be seen as directed against the West. As he told Brazilian journalists in Rashtrapati Bhavan (the official home of the President of India) immediately after his arrival in New Delhi: "Emerging nations cannot sit and wait for beneficial concessions from the richer nations. Accords such as these should not substitute international relations with developed countries, but complement them."

Twelve years later, however, hopes for free trade between Brazil and India have faded, and negotiations have not advanced much. The India-Mercosur PTA (Preferential Trade Agreement), which came into effect only in June 2009, grants preferential access for a very limited number of product categories and contains provisions on measures such as trade remedies and technical barriers to trade. The agreement grants tariff concessions of between 10 and 100% on 452 Indian product categories for import into Mercosur, and on 450 Mercosur product categories for import into India – hence, it only affects a fraction of overall trade between the two parties. Trade between Brazil and India has grown (albeit from a low base), but it remains insignificant as a percentage of both countries' overall trade.

In fact, it is highly questionable to what extent a trade agreement would have any discernible impact, given that the major barrier to trade between Brazil and India is not necessarily high tariffs, but rather poor transport connections and a lack of trade complementarity between the two countries. A more realistic approach could be directed towards trade facilitation and the improvement of transport and infrastructure links between the two. Better connectivity, removal of double taxation and visa exemption are more urgent and likely to be more far-reaching than a free trade agreement.

None of this, alas, is likely to happen anytime soon. While India is one of the world's fastest growing economies, Brazil currently faces severe difficulties, which has strongly reduced its diplomatic visibility. The IBSA grouping experiences a lull. Compared to Lula's passion for South-South cooperation and foreign policy in general, his successor Dilma Rousseff regards it only as secondary. For now, Lula's grand vision of stronger ties between two of the world's largest democracies in the Global South remains, despite some important progress (particularly thanks to the BRICS grouping), largely unfulfilled.

Read also:

Seeing India through Brazilian eyes

O argumento em prol do fortalecimento das relações Brasil- Índia

IBSA: Where do we go from here?

Photo credit: Ricardo Stuckert/PR