The Bolsonaro-Trump Relationship: Costs for Brazilian Values and Interests

By Laís Forti Thomaz and Tullo Vigevani*

Bolsonaro and Trump

Jair Bolsonaro (L) shakes hands with Donald Trump (R) at the White House in 2019/ Palácio do Planalto/ Flickr/ Creative Commons License (not modified)

New priorities in Brazil-U.S. bilateral relations since President Jair Bolsonaro took office in January 2019 have shifted the country away from its longstanding diplomatic values. In his eagerness to demonstrate a strong capacity to reach international deals, Bolsonaro has made concessions in talks that haven’t produced concrete benefits for Brazil.

  • Talks on a proposed merger of Boeing and Embraer ended when the U.S. company walked away from the table. Negotiations with the United States on the use of U.S. technology in space launches from the Alcântara Launch Center have been inconclusive – even after reaching the Alcântara Technological Safeguards Agreement (AST) and the Research, Development, Test, and Evaluation Agreement (RDT&E). Brazil granted a visa waiver to U.S. travelers without any reciprocity for Brazilian citizens visiting the United States. Even the government’s interest in joining the OECD has been controversial: its candidacy required Brazil to abandon its developing-country status at the WTO, and the Trump Administration then gave priority for OECD accession to Argentina.
  • In trade, for years Brazil has been one of the few countries in the world that has maintained a steady deficit with the United States. The expansion of quotas on ethanol and wheat from Brazil in favor of the U.S. (without opening the market for Brazilian agricultural commodities like sugar) and steel and aluminum tariffs are examples of unbalanced trade issues. The Brazil-U.S. Commission on Economic and Trade Relations has been negotiating various rules, but tariffs are not on the table. USTR Robert Lighthizer has stated, moreover, that the Administration doesn’t have “any plans right now for an FTA with Brazil.” A new “mini” trade deal supported by the Brazil-U.S. Business Council and the American Chamber of Commerce in Brazil may be forthcoming, but there is no evidence that it will better distribute the benefits of trade between the two countries.
  • When Trump mentions countries with the worst performance in combating COVID-19, he highlights Brazil and supports measures to prevent Brazilians from entering the United States.

The Bolsonaro Administration does not appear troubled by these failures, despite Brazil’s unilateral concessions, because they parallel the President’s worldview. Bolsonaro’s philosophical approach to foreign affairs is not far from the idea of the Monroe Doctrine and the realist theories that prevailed during the Cold War, but this time against China. The inclusion of Brazil as a major non-NATO ally can be seen in this logic. His team considers a close relationship with the Trump Administration as essential to Brazil in order to achieve its economic, strategic, and political objectives.

  • Bolsonaro and his advisors may also believe their responsibility is diluted by the fact that most of the recent agreements emerge from negotiations that started in previous Administrations, especially during Michel Temer’s 28 months in office preceding Bolsonaro’s inauguration in 2019. But the way that Bolsonaro concluded these agreements reversed key elements of traditional Brazilian diplomacy. Among them are the prominence of the advocacy of multilateralism, opposition to any kind of unilateralism, and respect for international law and sovereignty. Former Brazilian foreign ministers serving presidents of all major political parties since 1990 have issued a statement regretting this shift away from Brazilian allegiance to international institutions.

As with his embrace of chloroquine as a COVID‑19 treatment, Bolsonaro seems to believe that Trump’s solutions to bi-national problems are in Brazil’s interest. The resulting alignment with Washington borders on subservience – harming Brazil’s other strategic partnerships and strong foreign policy principles. Brazil is drifting away from Latin America, especially Argentina, as well as from the BRICS countries. The government is also neglecting Mercosur, despite the collective’s recent agreement with the European Union. Some European countries, concerned about Brazilian government policies on the environment and Amazon rainforest preservation, have been questioning Bolsonaro’s attitudes and cooling on the deal. While the Brazilian Constitution gives priority to peaceful relations with all countries, members of the Bolsonaro cabinet have suggested supporting a possible invasion of Venezuela.

  • The lack of concrete benefits for Brazil from the U.S. relationship does not appear likely to drive a reassessment of Bolsonaro’s approach. Similarly, the government’s Trump-like confrontations with a large part of the international community, including the World Health Organization (WHO) and the United Nations (UN), show no sign of diminishing despite their high costs. Brazil and the United States have been strategic partners – as Presidents Lula da Silva and George W. Bush reaffirmed in 2005 when establishing a new strategic dialogue – yet the two countries’ current presidents have disrupted the terms of this relationship in ways that will take years, if not decades, to mend.

July 13, 2020

*Laís F. Thomaz is Professor at the Federal University of Goiás (UFG). Tullo Vigevani is Professor at the State University of São Paulo (Unesp) and researcher of the Center of Contemporary Culture Studies (CEDEC). Both are researchers at the National Institute of Science and Technology for Studies on the United States (INCT-INEU).

U.S.-Latin America Policy According to John Bolton

By Eric Hershberg and Fulton Armstrong

John Bolton

John Bolton/ Gage Skidmore/ Flickr/ Creative Commons License (not modified)

Former U.S. National Security Advisor John Bolton’s memoir highlights his differences with President Trump and several government agencies over tactics for achieving regime change in Venezuela. It confirms, however, that they share an embrace of the Monroe Doctrine that has survived his departure from government. The book, published this week, is Bolton’s version of his 17 months in the Trump Administration. The chapter on Venezuela is 34 pages long and, while confirming much about the Administration’s disdain for the law and longstanding practices in U.S. foreign policy, provides new insights.

  • Bolton’s pledge in November 2018 to rid the hemisphere of the “Troika of Tyranny” – Cuba, Venezuela, and Nicaragua – reflected a consensus in the Administration, and he attributes the alliterative trope to a Trump speechwriter. But as the policy gained momentum, the Treasury Department and State Department wanted to go slow on some of the more draconian sanctions against Venezuela that he pushed.
  • Bolton puts the best face possible on Venezuelan National Assembly President Juan Guaidó and his claim to the national presidency in January 2019. He credits the Venezuelan opposition entirely for conceiving and initiating the maneuver, even though circumstantial evidence, including the advanced U.S. efforts to build international support for it, suggests otherwise.
  • Tellingly, he says his initial reaction to the country’s repeated waves of electricity outages was that it was the opposition’s work, although he then posits that they resulted from government incompetence and underinvestment, leaving open the possibility that they resulted from an intelligence operation. (Bolton would be violating his secrecy commitments if he admitted as much.)
  • Bolton reports that President Trump consistently argued that Guaidó – whom he called “this kid” – was a lightweight incapable of wrestling control from Venezuelan President Nicolás Maduro.
  • Trump was the strongest proponent of military intervention to remove the Venezuelan from office. But Trump also felt he could deal with Maduro as he did with Vladimir Putin, Xi Jinping, and Kim Jong-un. He flip-flopped again last weekend. On Friday he told Axios that he “would maybe think about [meeting Maduro],” suggesting openness to dialogue, but on Monday he tweeted that he “would only meet with Maduro to discuss one thing: a peaceful exit from power!”

Bolton barely registers the contributions of Latin American and European governments in support of the American position on the Venezuela issue or the advancement of a negotiated solution.

  • The position of the “Lima Group” on Venezuela gets only a passing mention, although the group’s support was arguably a historic signal of Latin American acquiescence in Washington intervention in the region. The OAS got a backhanded compliment: “Even the Organization of American States, one of the most moribund international organizations (and that’s saying something), was roused to help Guaidó.”
  • Although Norway had been arranging negotiations between Maduro and Guaidó representatives for eight months by the time Bolton resigned as National Security Advisor in September 2019, the book makes little mention of the effort. Nor does it mention U.S. actions that – by design or not – obstructed the talks. The work of Elliott Abrams, the Administration’s special envoy for Venezuela, also gets no serious treatment.

Bolton is gone, but his vision for U.S.-Latin America relations, including revival of the Monroe Doctrine as rationale for Washington’s actions, remains robust. The Administration has nominated the senior director that Bolton brought to the NSC to work on the region, a protégé of Florida Senator Marco Rubio, to be President of the Inter-American Development Bank, a perch from which he can exercise influence for five years even if Trump leaves office in January 2021. If the aide is elected, it would break with the tradition of having non-U.S. presidents at the Bank. A half dozen retired Latin American presidents have expressed opposition to that, but Ecuador’s government has labeled the nomination as “very positive,” and Bolivian President Jeanine Áñez, who took office with U.S. approval after the military forced out President Evo Morales last November, has welcomed it enthusiastically.

  • The Pentagon will not be enthusiastic about military action to remove President Maduro. But some officials have referred to the two paramilitary contractors captured seven weeks ago during the ill-fated “invasion” of Venezuela and six dual-national CITGO employees arrested in 2017 for alleged corruption as “hostages” – a possible pretext for some sort of action that, as Bolton so fervently hoped during his tenure, would prompt the Venezuelan military to finally switch sides.

June 23, 2020

The Other Pandemic

By Alan M. Kraut*

Donald Trump speaking to supporters

Donald Trump speaking to supporters at an immigration policy speech at the Phoenix Convention Center in Phoenix, Arizona. / Flickr / Creative Commons License

The coronavirus has sparked a virulent wave of racism and intolerance in the United States – as seen in past pandemics – but strong leadership can blunt or even stop it. The current wave echoes a contemporary ethnocentric nationalism that has infected many societies and political leaders around the world.

  • U.S. President Donald Trump denounced the anti-Asian prejudices – including epithets and, at times, spit and punishing blows against Chinese-Americans – that were stirred by his own use of the terms “foreign virus” and “Chinese virus,” but the damage was done. A community was put on notice, “You are the ‘other’ and you endanger us all by your presence.”

Throughout human history, groups defined by race or religion have been persecuted because of their association with disease. The Black Death of the Middle Ages was blamed on Jews, triggering ferocious physical persecution that resulted in tens of thousands of deaths, often by torture. Sociologist Erving Goffman observed that the most essential version of stigma was the abomination of the body – because the disease-causing contagion cannot be detected with the naked eye or easily avoided.

  • Throughout American history, epidemics have often been blamed on a specific immigrant or ethnic group and triggered anti-migrant policies. A cholera epidemic in 1832 was blamed on Irish Catholic newcomers who were poor and lived in congested conditions. The anti-Catholic passions of Protestant evangelicals were a factor.
  • Before the Quarantine Act of 1878 quarantine powers shifted from the states to the federal government. Each state had its own laws and immigration depots, such as Castle Garden in New York, which opened in 1855. Later, at federal depots, physicians used increasingly sophisticated medical instrumentation and diagnostic techniques to admit the healthy and those sufficiently robust to support themselves, but their expertise did not curb xenophobic hysteria or the association of immigrant groups and their behaviors with specific diseases. Chinese laborers were blamed for bubonic plague in the San Francisco area in the 1880s, and Italians were blamed for a polio epidemic that swept through the east coast of the United States in 1916. Anti-Semitic xenophobes dubbed tuberculosis the “Tailor’s Disease” or the “Jewish Disease” despite the lower rates of the disease in Jewish communities than in many non-Jewish communities in the United States.

Xenophobia and racism have not always surged in the United States during pandemics – thanks to greater public awareness of immigrants’ contributions and to strong political leadership.

  • There were fewer incidents of xenophobia during the 1918 influenza pandemic because immigration declined dramatically (from 1,218,480 a year in 1914 to 110,618 in 1918), and critics found it awkward to blame newcomers because over half a million foreign-born soldiers of 46 different nationalities were serving in the U.S. military.
  • Many Presidents of both parties since then have not hesitated to encourage Americans to call upon the better angels of their nature with respect to the foreign-born. Sitting in the shadow of the Statue of Liberty, Democratic President Lyndon Johnson signed an immigration act in 1965 that abandoned the most restrictive immigration policy in American history and replaced it with a more welcoming policy. Years later, former Republican President George W. Bush echoed those sentiments, noting that “America’s immigrant history made us who we are.”
  • Xenophobia during an epidemic may be a “social ritual” that reaffirms a hypernationalism in the native-born, but when the drama concludes and the curtain descends, the prejudice and acts of discrimination can either transfer to a different stage or leaders can lead us away from them.

Little such leadership has come from the current occupants of the White House. Presidential advisor Stephen Miller and his allies claim that stopping new arrivals crossing the country’s southern border is necessary to preserve public health from illnesses borne by migrants. In 2018, the surge of migrants toward the border led to inquiries that Miller hoped would reveal – but did not – the spread of highly contagious diseases that endangered residents of states where they settled. More recently, Miller has encouraged the President to use his public health powers to seal the borders. One such federal law, the Public Health Service Act of 1944, allows the Surgeon General and the President to exclude from the U.S. individuals who might pose a danger because they could bring in “communicable diseases.” Ironically, while it has been Miller’s intention to target Latinos, many of them are doing the “essential work” that has kept the nation going during the crisis – in meat processing plants, grocery stores, and hospitals, where they are involved directly in the care of Covid-19 patients. Many thousands of those providing patient care are Latino “Dreamers” protected by the Deferred Action for Childhood Arrivals (DACA) program that the White House wants to end.

May 12, 2020

* Alan M. Kraut teaches history at American University.

United States: Putting the Hammer to Venezuela

By Fulton Armstrong and Eric Hershberg

Trump press conference

Trump at a briefing on April 4th, 2020/ The White House/ Flickr/ Public Domain

The Trump administration’s increasingly aggressive actions to drive regime change in Venezuela – at a time that the already-desperate country, weakened by its incompetent government and U.S. sanctions, faces a potentially massive COVID-19 crisis – reflect Washington’s favoring of ends over means, with little concern for corollary damage. Regardless of whether President Nicolás Maduro survives the challenge, the country’s massive humanitarian and social disaster is likely to grow worse during the weeks and months ahead. At this point, there is no plausible scenario in which Washington can achieve what it claims is its desired outcome – a stable, democratic government – without a negotiated settlement.

  • The March 26 indictment of Maduro and other senior Venezuelan officials on charges of narcotics-trafficking and support for terrorism against the United States underscored the administration’s commitment to removing a government it calls a “threat to the hemisphere.” The U.S. Department of Justice asserted that Maduro “expressly intended to flood the United States with cocaine in order to undermine the health and wellbeing of our nation.” The indictment forced an end to preliminary talks between Maduro and his opponents over a partial truce that would allow them to make a joint appeal for international aid to deal with COVID‑19.
  • On March 31, the administration announced a “Democratic Transition Framework” for Venezuela. The plan called for Maduro to step down immediately and yield to a “Council of State” to govern until new elections. National Assembly President Juan Guaidó, whom the United States and more than 50 other countries recognize as Acting President, would surrender his claim as well, but American officials made clear he had their full support in any upcoming campaign. Coming on the heels of the indictments, the framework was quickly rejected by the government.
  • The announcement on April 1 that the United States and 22 allies were launching “enhanced counternarcotics operations” in the Caribbean near Venezuela – with large-scale military assets rarely seen in such missions – was another prong of what U.S. National Security Advisor Robert O’Brien called “our maximum pressure policy to counter the Maduro regime’s malign activities.” Maduro cited these threats and indications of mysterious arms movements in Colombia – reported by a former Venezuelan general who some observers say turned collaborator with the U.S. DEA – as reasons for putting the country on military alert last weekend.

The U.S. actions appear to reflect a calculation that the Venezuelan government is so vulnerable that Maduro’s “former regime” will collapse and, somehow, a more sympathetic successor will emerge. U.S. sanctions over the past year-plus have effectively starved the economy, and the recent crash in oil prices has reduced revenues to a trickle. Observers in Caracas report that fear of COVID-19, in a country without medical supplies or even clean water in many parts, is intense.

  • The administration insists it desires a negotiated settlement, but these enhanced pressures, particularly the indictments, greatly complicate any effort to revive talks as Norway had configured them. Similar to last year’s efforts to provoke a coup against Maduro, this year’s “maximum pressure” seems premised on creating a collapse on a scale that forces the military’s hand. But the task of overthrowing Maduro would fall to an exhausted citizenry and field-grade officers not indicted or otherwise targeted by the United States government.

Whether Washington has a comprehensive strategy, is just taking ad hoc steps to force regime change, or is merely looking to wreak havoc at a time that its handling of the COVID‑19 crisis at home is falling under intense criticism, there is precious little historical evidence that its tactics will work in Venezuela. The movement of warships to the Venezuelan coast may only be a publicity stunt, with the support of some countries in the region, but it entails diplomatic and operational risks. It also is not beyond the pale to suppose that the administration, long frustrated in its regime-change efforts, will begin to believe its hyperbole about Maduro as a narco-terrorist poisoning drug-consuming U.S. youth, and be tempted to deploy measures even more drastic than those taken to date.

  • Negotiations, although difficult, are not impossible. When U.S. opposition to diplomatic efforts to resolve the wars in Central America reached a certain point, regional governments met behind Washington’s back and produced a historic plan – the “Esquipulas Accord” – that led to peace processes in each affected country. This situation is, of course, different, but Esquipulas showed that moving the U.S. to the side can work.
  • The indictments are reminiscent of U.S. tactics to overthrow General Manuel Noriega in Panama in 1988-89 – resulting in a massive invasion to arrest that one man. Venezuela is different in many ways, and all parties should heed the adage of former U.S. military commander and Secretary of State Colin Powell, who said, “You break it, you own it.”

April 7, 2020

USMCA: Devil’s in the Details on Automotive Content

By Frank L. DuBois*

Automated manufacturing of cars

Automated car manufacturing/ Steve Jurvetson/ Flickr/ Creative Commons License

The automotive trade regime in the recently completed U.S.-Mexico-Canada Trade Agreement (USMCA) – “NAFTA 2.0” – will create headaches for many manufacturers but appears unlikely to deliver the big boost in jobs it promises. Much of the focus of the negotiations was on changing the automotive rules of origin (ROOs) to encourage more auto manufacturing in the United States and Canada and make it difficult for automakers to shift production from high-wage locations to low-wage factories in Mexico. Under the new rules, some manufacturers will see significant changes in operational strategies while others will be less impacted.

According to the agreement, a 2.5 percent tariff will be applied to the import value of cars (25 percent for light trucks) if the vehicles don’t meet the new ROOs:

  • 70 percent Regional Value Content (RVC) rather than 62.5 percent under the old rules.
  • 40 percent of the Labor Value Content (LVC) of vehicles (45 percent in the case of light trucks) must be made in plants that employ workers making at least $16 per hour.
  • 70 percent of the value of steel and aluminum used in the vehicle must be of regional origin.

The Kogod Made in America Auto Index (KMIAA), which I’ve been compiling for seven years, challenges assumptions used when calculating the U.S. content of a car, including some used as marketing strategies to portray products as being more “American” than what a buyer might think.

  • KMIAA results and rankings differ significantly from those indices that evaluate domestic content solely based on where a car is assembled, without taking into account the country of ownership of the brand. (Japanese, Korean and German car manufacturers are treated the same as U.S. manufacturers despite non-US R&D and profits that are repatriated back to the home country). Location of manufacture of engines and transmissions, which account for approximately 21 percent of vehicle value, may also not be addressed in other indices. Likewise, assembly labor accounts for around 6 percent of vehicle value.
  • The index reveals the complicated nature of content calculations. Toyota assembles only one vehicle at its plant in Tijuana – the Tacoma light truck with an engine of either U.S. or Japanese origin (depending on displacement) and a transmission of either U.S. or Thailand origin. Toyota has made the same truck in San Antonio, Texas, but recently announced that all of Tacoma production will be moving to the Mexican factory. Toyota is likely to reduce its non-North American sourcing (fewer engines and transmissions from Asia), and restructure supply chains to place a premium on U.S. parts and power train sourcing. Other manufacturers face greater shifts. The Audi Q5, for example, currently has 79 percent Mexican parts content and only 3 percent U.S. parts.

Producers’ operational responses are likely to run the gamut from full compliance to limited changes. Some automakers may simply pay the WTO tariff of 2.5 percent for access to the U.S. market. A separate requirement that at least 40 percent of the value of cars be made in plants with $16 per hour labor will be problematic given that wages in Mexican auto plants average $3 to $4 per hour. Producers will have to decide whether to raise wages in Mexican plants, shift sourcing to U.S. and Canadian plants, or attempt to develop ways to game the system by shifting some high-wage expenses into the labor value category. While the new rules may boost some manufacturing jobs in the U.S. and Canada, they will raise costs leading to lower auto sales, and have nowhere near the impact that their boosters have promised. Again, the devil is in the details.

March 5, 2020

* Frank L. DuBois is an Associate Professor of Information Technology and Analytics at American University’s Kogod School of Business. Data for the KMIAA comes from data automakers provide under the American Automotive Labeling Act (AALA) and from field visits to car lots in the DC metropolitan area.

U.S.- Latin America: Policy Shifts Ahead?

By Fulton Armstrong

Former White House National Security Adviser John Bolton speaks to reporters on events occurring in Venezuela Tuesday, April 30, 2019, outside the West Wing entrance of the White House.

Former National Security Advisor John Bolton speaks to reporters on Venezuela in April 2019/ Tia Dufour/ White House/ Wikimedia Commons

The sudden departure of President Trump’s outspoken national security advisor, John Bolton, is unlikely to result in changes in U.S. policy objectives in Latin America but could lead to the same sort of swings in tactics – harder or softer – that characterize other U.S. policies around the world. The continued weakness of the State Department’s input, aggravated by erratic staffing in its Latin America offices, further suggests that it will not play a balancing role.

Trump and Bolton’s statements over their 17 months together indicated no disagreement on objectives and tactics in Latin America, including immigration, close relations with Brazilian President Bolsonaro, efforts to rescue the Argentine economy, and Venezuela. They had identical positions on the waves of sanctions against Venezuela, U.S. commitment to remove President Nicolás Maduro, and unstinting support for National Assembly President Juan Guaidó’s claim to the Presidency, including backing Guaidó’s flopped coup in April. They both also explicitly linked taking down Maduro with achieving regime change in Cuba.

  • Trump and U.S. Senator Marco Rubio, widely seen as his top referent on Latin America and related political matters, are trying to signal that after Bolton’s departure the Administration is going to turn up the heat on Venezuela and Cuba. In apparently coordinated tweets between them, Trump said, “In fact, my views on Venezuela, and especially Cuba, were far stronger than those of John Bolton. He was holding me back!” This complements rumors that Trump has been frustrated that Bolton’s strategy in Venezuela, particularly the fact that Maduro supporters had tricked him into false confidence in Guaidó’s failed coup, has not removed Maduro from office. (It is unclear if one of his concerns is that U.S. sanctions are worsening the refugee flow challenging neighboring countries.)

Most Washington-based observers believe, however, that Latin America is the least important of the five issues that, according to press, caused friction between Trump and Bolton. The President’s personal involvement has been much greater with North Korean leader Kim Jong Un, in efforts to achieve regime change in Iran, in talks with the Taliban for withdrawal of U.S. troops from Afghanistan, and in maintaining good relations with Moscow despite the complex situation in Ukraine.

  • Trump has appeared to lack deep interest in Latin America policy and sees it as primarily a domestic political tool for consolidating his base – among anti-Maduro and anti-Cuba voters in Florida, an important state in his re-election calculus, and among supporters for his wall on the Mexico border and other anti-migration measures. Long ago he essentially handed the Venezuela and Cuba issues over to Senator Rubio, and the National Security Council brought a Rubio ally, lobbyist, and blogger, Mauricio Claver-Carone, to the White House to work the issue. They appointed Elliot Abrams, despite baggage from the Iran-Contra era and the Bush-Cheney Administration, to handle diplomatic operations on Venezuela for them.
  • By all appearances, Secretary of State Michael Pompeo has subordinated his own Latin America team to the White House operators, essentially stifling a traditionally important voice at the policy table. When Assistant Secretary Kimberly Breier resigned last month, only nine months after being confirmed by the U.S. Senate, she said it was to spend more time with her family, but her bureau’s marginalization left questions about her policy impact. Her acting successor, veteran State Department lawyer Michael Kozak, who has spent much of the last 10 years managing “democracy promotion” programs in Latin America and elsewhere, is not likely to challenge Rubio and Claver-Carone unless Pompeo takes the lead, which he shows no sign of doing.

The new national security advisor will have more urgent problems to deal with than wrestling with Rubio, Claver-Carone, and their allies. Indeed, Trump may even give them a green light to escalate provocations even further. For example, Administration allegations that Colombian guerrillas and narcotics-traffickers receive crucial aid from Caracas – buttressed by invocation of the Rio Treaty last week – are logical ways of laying the political groundwork for some sort of military action, perhaps jointly with Colombia, against alleged camps in hopes that the Venezuelan military finally tells Maduro that it’s time to go. 

  • President Trump’s trademark approach to thorny problems has been unpredictability and experimentation with wide-ranging alternatives, including face-to-face negotiations and deal-making with opponents that pose much tougher challenges to U.S. interests than do Venezuela and Cuba. Such flexibility notwithstanding, with the U.S. elections just 14 months off, Trump’s electoral calculus strongly suggests he’s going to stay the course with policies toward Latin America that he’s told are popular in South Florida.

September 17, 2019

EU-MERCOSUR: Does Their New Association Agreement Mean Much?

By Thomas Andrew O’Keefe*

29/06/2019 Coletiva de Imprensa UE-Mercosul

Press conference about the trade agreement between the Mercosur and the EU / Palácio do Planalto / Creative Commons

After nearly two decades of intermittent negotiations, the European Union and the four core MERCOSUR nations (Argentina, Brazil, Paraguay, and Uruguay) have finally inked a trade agreement, but its real impact won’t be felt for years, if ever. When the negotiations began in the mid-1990s, the EU was the largest trading partner of the MERCOSUR countries, and the United States was number two. Today China is in first place, the European Union is second, and the U.S. is fourth, behind intra-Latin American trade (EU investors, however, continue to have the largest stock of foreign direct investment assets in the MERCOSUR region). When ratified, the EU-MERCOSUR Association Agreement, signed in Brussels on June 28, will exempt a little more than 90 percent of two-way trade from tariffs.

  • About 93 percent of MERCOSUR exports will eventually obtain duty-free access into the EU market, the bulk as soon as the agreement comes into effect. Agricultural commodities such as beef, chicken, corn, eggs, ethanol, honey, pork, rice, and sugar only get reduced duties, with many also subject to quotas. Another 100 MERCOSUR agricultural items are completely excluded from any type of preferential treatment.
  • Some 91 percent of European exports will get duty-free access to MERCOSUR, but gradually as tariffs are reduced over a 10-year period. The phase-out is over 15 years in the case of European automobiles, furniture, and shoes. MERCOSUR tariffs on the remaining 9 percent of primarily EU manufactured goods will remain in place permanently.
  • The agreement offers service providers from any signatory country full access to the markets of all the other signatory states.

MERCOSUR showed greater flexibility with the EU on agricultural subsidies than it had with the United States, a position that contributed to ultimate rejection of the Free Trade Area of the Americas (FTAA). Subsidies in the EU-MERCOSUR agreement are permitted if “necessary to achieve a public policy objective.” The MERCOSUR countries also capitulated on the use of anti-dumping tariffs on intra-hemisphere trade. The new accord, however, does authorize governments to impose a duty that is less than the margin of dumping if it adequately removes injury to the affected domestic industry. It also includes provisions for ensuring that sanitary and phytosanitary (SPS) measures as well as technical norms are not abused and become disguised impediments to free trade, although it permits enforcement of the European “precautionary principle” notion to restrict the importation of genetically modified food, for example, where the risks to health are not scientifically conclusive.

The agreement – now being “legally scrubbed” and translated into the EU’s 23 official languages – faces an elaborate, multi-year ratification process in the EU, where individual countries and the European Parliament must approve it, as well as each MERCOSUR government. Agricultural forces are already lining up in many European countries in opposition. In the meantime, the accord’s greatest impact is a signal by Brazilian President Bolsonaro and Argentine President Macri that they’re making progress on their stated objective to return MERCOSUR to its original trade focus – in contrast to their predecessors – and to claim an economic “victory” when growth in both countries remains stagnant.

  • Despite the flexibility MERCOSUR showed on agricultural subsidies and anti-dumping, its main sticking points with the United States in the FTAA, a free trade agreement with the United States seems remote as the Trump administration – in contrast to the Europeans – is unlikely to offer meaningful concessions based on the lesser developed status of the MERCOSUR countries. Neither will the Association Agreement with the EU reverse or even slow the region’s shift toward trade with China and the rest of Asia.

August 6, 2019

* Thomas Andrew O’Keefe is the President of New York City-based Mercosur Consulting Group, Ltd. and a lecturer at Stanford University. He is the author of Bush II, Obama, and the Decline of U.S. Hegemony in the Western Hemisphere.

Latin America: The Perils of Judicial Reform

by Aníbal Pérez-Liñán and Andrea Castagnola*

Former President of Chile and current head of the United Nations OHCHR Michelle Bachelet addresses the Chilean Supreme Court in 2015

Former President of Chile and current UN High Commissioner for Human Rights Michelle Bachelet addresses the Chilean Supreme Court in 2015/ Gobierno de Chile/ Flickr/ Creative Commons/ https://www.flickr.com/photos/gobiernodechile/22180910394

Conventional wisdom that institutional reforms always strengthen the judiciary is not supported by the facts. A constitutionally fixed number of justices is widely thought to make “court packing” more difficult, and longer terms in office supposedly protect judges from partisan trends. Nomination processes that involve multiple actors should produce moderate justices; high requirements for impeachment should protect judges from legislative threats; and explicit powers of judicial review should assure politicians’ compliance with judicial decisions. Our research, however, shows that institutional reforms often undermine judicial independence, even when they appear to improve constitutional design along these crucial dimensions.

  • Countries with longer democratic traditions such as the United States, Chile, Costa Rica, and Uruguay display low turnover: few justices leave office in any given year, and their exits appear to follow a random pattern. But countries like Bolivia, Honduras, Guatemala, El Salvador, and Paraguay – all of which nominally protect judges from political pressures – display abrupt patterns of judicial turnover. On repeated occasions, a majority of the court has left in the same year, allowing for a complete reshuffle. About half of all exits in our sample took place in years when more than 50 percent of a court left at once, mostly due to political pressures.
  • Some constitutions create turnover by design. Until 2001, for example, Honduran justices served for four years, concurrent with the presidential term. However, less than 30 percent of court reshuffles can be explained by constitutional rules. In Argentina, even though the Constitution grants Supreme Court justices life tenure, presidents forced a majority of justices out of office in 1947, 1955, 1958, 1966, 1973, 1976, and 1983.

Our project analyzed the tenure of almost 3,500 justices serving in Supreme Courts and Constitutional Tribunals in the Western Hemisphere since 1900. We found – against our expectations – that several constitutional reforms increased the likelihood of turnover in the high courts. Because major reforms produce turnover in Supreme Courts and Constitutional Tribunals, they create new opportunities for parties to appoint loyal judges and politicize the courts.

  • Constitutional reforms that involve more actors in the nomination of justices (i.e., “multilateralize” the process) also increase turnover in the high courts. Reforms that constrain the removal of justices (for example, requiring supermajorities for their impeachment) paradoxically have prompted the exit of justices in democracies. Constitutional reforms that granted courts explicit powers of judicial review of government actions increased judicial instability, and reforms that grant life tenure to justices on average created turnover in the high courts, particularly when adopted under dictatorships.
  • Two basic reasons seem to explain these paradoxes. In the short run, reformers exercise (and abuse) “constituent” power, restructuring the courts in ways that force the resignation of incumbent justices or create new vacancies. In the long run, formal constitutional protections for the judiciary create a strategic trap. If parties can use informal instruments, such as threats and bribes, to induce the resignation of judges, their incentives to deploy those blunt instruments are greater when justices are completely isolated from other forms of political influence.

Some features of constitutional design – including life terms and supermajority requirements to impeach judges – do explicitly protect justices against purges. Other constitutional features, however, create incentives for the political capture of high courts. Greater powers of judicial review, for example, make courts politically relevant and, therefore, more important targets. A constitutionally fixed number of seats prevents court “packing” but encourages purging as an alternative. Appointment procedures controlled by the President and Congress make purges profitable for them. Irrespective of their stated goals, constitutional amendments and replacements offer a window of opportunity to reorganize the composition of the judiciary.

  • Judicial purges occasionally pursue desirable goals, like the removal of judges who have been corrupt or obstructed transitions to democracy, but a recurrent pattern of politicized replacements inevitably produces a weak judiciary, creating an unstable interpretation of the laws and the Constitution.

July 9, 2019

* Aníbal Pérez-Liñán teaches political science and global affairs at the University of Notre Dame, and Andrea Castagnola teaches judicial politics at the Universidad Torcuato Di Tella, in Buenos Aires. Their project was supported by the National Science Foundation. Conclusions expressed here do not necessarily reflect the views of the NSF.

Mexico: Has AMLO Compromised on Human Dignity?

By Alexandra Délano*

Mexican Foreign Secretary Marcelo Ebrard speaks during a meeting in 2018, during which U.S. Secretary Mike Pompeo was present

Mexican Foreign Secretary- designate Marcelo Ebrard participates in a bilateral meeting with U.S. Secretary of State Michael R. Pompeo in Mexico City on October 19, 2018. State Department photo/ Wikimedia Commons

Mexico has always negotiated with the United States from a position of weakness – it depends on its northern neighbor economically and politically more than the other way around – but the recent negotiations, compromising its commitment to human dignity in exchange for avoiding tariffs, may be among the worst outcomes. Tariffs on Mexican products would surely be costly for Washington, as business leaders and Republican legislators have stated recently, but the much greater economic threat is to Mexico. As a result, Mexico has consistently sought to keep the issue of migration separate from trade and other priorities – a delinking that both countries have accepted for the sake of advancing economic integration.

  • Trump has destabilized that tacit agreement by asserting that maintaining the status quo in commercial relations will depend on new steps by Mexico to support expansion of barriers on its northern border, to better control its southern border, and to stop the flow of migrants from Central America. In addition to imposing the tariffs, Trump threatened to abandon the newly negotiated North American Trade Agreement (“USMCA”) and even to close the U.S.-Mexico border.
  • President Andrés Manuel López Obrador (AMLO) has opted for a strategy of minimizing confrontation with Trump. This has implied concessions such as accepting the return of persons awaiting asylum hearings in U.S. courts. Even though this policy, called the Migrant Protection Protocols (or Quédate en México), is not in an official agreement, and even though it does not go to the extreme of establishing Mexico as a “safe third country” – which would obligate migrants to claim asylum in Mexico instead of having the option of continuing their journey to the United States – it is an attempt to appease Trump and maintain the fragile balance in the relationship.
  • AMLO has taken other steps to placate Trump. For example, Mexico and the UN’s Economic Commission for Latin America and the Caribbean (ECLAC or CEPAL) recently announced a development plan for Central America that, although limited in scope and without apparent funding, is an important step towards addressing root causes of migration in the region.

AMLO’s government negotiated to increase its control of the southern border and to continue to host asylum-seekers awaiting a court hearing in the United States. It did so in the absence of an integrated migration strategy, and without a commitment to invest resources, at a time when the budget of the Mexican Commission for Refugee Assistance (COMAR) was just cut 20 percent. The Instituto Nacional de Migración (INM) is also ill-positioned to assume a greater role without addressing its need for the resources and measures necessary to root out corruption and reduce its over-reliance on detention and deportation. Officials from these organizations were not even included in the negotiations – further reflecting the lack of vision and interagency coordination on the migration challenges. Not surprisingly, the INM Commissioner resigned days after the agreement was announced.

  • Mexico’s policies also appear to neglect the need to strengthen multilateral mechanisms to compensate for its weakness in the face of U.S. pressure. Mexico has traditionally been one of the most active promoters of multilateral agreements on cooperation on migration issues, including the Global Compact on Migration approved last year, but it appears unable to build on these accomplishments to either counterbalance Trump’s pressures or guide an internal policy on what to do. It has also failed to build support among G20 allies, including Canada – its second most important trading partner and a player in the extractive activities implicated in driving emigration and internal displacement in Central America and Mexico.

Mexico’s migration policy at this point is very far from the ideals laid out by López Obrador. His primary concern has been to pursue the impossible goal of containing Trump without harming other interests. Above nationalist posturing – claims that Mexico will never negotiate away its dignity – is the need to protect the dignity of persons. A migration policy that prioritizes migration control and that is based on the mood swings of the United States’ government does not meet this basic criterion. It leaves Mexico in the same weak, isolated position from which it cannot negotiate agreements on labor mobility, humanitarian protection, and economic development. Mexico seems to have made a strategic error in response to Trump’s most recent tantrum – one likely to reoccur under even more challenging conditions as the 2020 election nears.

June 25, 2019

* Alexandra Délano is chair of the Global Studies Department at the New School in New York City. This article is adapted from her essay in El País on June 5, Lo que está en juego en las negociaciones con Estados Unidos: la dignidad humana.

U.S.-Mexico: Tariffs, Threats, and Trade Agreements

By Ken Shadlen*

Cargo ships

Cargo ships off shore of Galveston Island, TX / Jocelyn Augustino / Creative Commons / https://commons.wikimedia.org/wiki/File:FEMA_-_38860_-_Cargo_ships_off_shore_of_Galveston_Island,_TX.jpg

The United States’ threat last week to apply tariffs on imports from Mexico, unless Mexico revamped its approach to Central American migrants passing through the country, underscores the power asymmetries in the global economy – and undermines the credibility of U.S. trade agreements elsewhere. President Trump threatened to abrogate U.S. commitments under NAFTA (and the WTO) unless Mexico introduced measures in an area that is not addressed by NAFTA. While the tariffs won’t be applied, at least not now, and there is debate about just how much Mexico changed its migration policies as a result of Washington’s maneuver, the linkage between trade and “non-trade” issues such as immigration, especially within preferential trade agreements such as NAFTA, have deep implications for the political economy of international trade.

  • Many critics of Trump’s threats claim that immigration policy and trade policy are distinct, and that it makes no sense for the administration to link the two. But this misses the point: what is and is not “trade” is determined politically. Since the 1980s, the United States has conditioned market access on the introduction and enforcement of a wide range of “trade-related” policies, including investment, intellectual property, government procurement practices, and so on. Market size confers to the importing country the power to define what constitutes “trade,” and the definition of “trade” thus has changed according to Washington’s preferences. In that sense, Trump’s linkage maneuver is not at all new.
  • On the one hand, NAFTA is the outcome of massive linkage of this sort, as Mexico was required to introduce extensive changes to policies and practices in a range of trade-related policy areas in order to qualify for the agreement. On the other hand, NAFTA was meant to protect against further “ad hoc linkage,” with new conditions attached at the whim of the United States.
  • Prior to NAFTA, Mexico’s exports largely entered the U.S. market under the Generalized System of Preferences (GSP), which offers preferential market access to exports from developing countries under a wide range of conditions. But GSP preferences can be withdrawn unilaterally, and, as the importing country, the United States changed GSP preferences in response to its changing sentiments. Beneficiary countries always ran the risk of having the U.S. Congress and Executive attach additional conditions to the program, like ornaments on a Christmas tree.
  • NAFTA and other NAFTA-like trade agreements that have followed promised to deliver substantially more predictability and stability than the GSP.

Recent events question these premises. In 2017-18, Trump warned that Washington would withdraw entirely from NAFTA unless it was renegotiated on terms more to his liking. Last week’s threat to remove preferential market access unless Mexico changed its immigration policies and practices is precisely the sort of behavior that NAFTA was meant to protect against. The agreement supposedly replaced the unstable preferences of GSP, which were always vulnerable to the whims of U.S. politicians, with a new set of preferences that were clearly defined, had fixed conditions, and were less prone to being unilaterally withdrawn. But evidently it didn’t.

Washington’s actions are similar to if the Mexican government announced it would stop enforcing copyrights and patents of U.S. firms, unless the United States were to substantially increase science and technology assistance to help upgrade the stock of biologists, chemists, and engineers in Mexico. The reaction to such an announcement would be ridicule, and Washington would claim NAFTA (and the WTO) binds Mexico to protect intellectual property. The United States would assert, moreover, that its science and technology assistance is not covered by NAFTA; Mexico’s threat would elicit no change of behavior on the part of the US. 

  • Beyond NAFTA per se, these events make one wonder why any country would sign a trade agreement with the United States. After all, if countries already have preferential market access under the GSP, then one of the main benefits of reciprocal trade agreements is to lock-in and stabilize those preferences – even with the need to make substantial concessions on “trade-related” policy areas. If, in reality, only half of the bargain is locked in, if the benefits can be made to disappear at the whim of the U.S. President, then for many trading partners the benefits of such agreements will be unlikely to compensate for the costs.

June 11, 2019

*Ken Shadlen is Professor of Development Studies and Head of Department in the Department of International Development at the London School of Economics and Political Science.