A flawed application

Brazil wants to join the OECD – its candidacy will not be taken seriously without environmental reforms and fiscal prudence.

Jair Bolsonaro’s Brazil is not an obvious contender for OECD membership. His policies have led to record levels of deforestation in the Amazon and a once ambitious economic roadmap prioritising private investment has been displaced by creeping protectionism. The OECD – a group of wealthy trading nations – dislikes those sorts of things and will want to avoid having its reputation sullied by the administration’s populist tendencies. Thus, negotiations to progress the country’s membership will advance slowly.  

Reputational issues aside, Brazil is an important country and there are benefits to the bloc should the country make a nod to greater compliance on fiscal and environmental sticking points. An international relations professor at a leading Brazilian university and think tank explained, “What makes Brazil particularly attractive for the body is that it will be the only country which is a member of the BRICS and OECD at the same time. These are two completely different universes in terms of power and geopolitics and membership would make Brazil a privileged intermediary.”

“Brazil […] will be the only country which is a member of the BRICS and OECD at the same time. These are two completely different universes in terms of power and geopolitics and membership would make Brazil a privileged intermediary.”

Professor, international relations, Brazil

President Bolsonaro attaches significant importance to becoming an OECD member – successful negotiations this year would also provide a much-needed boost to his flagging poll numbers ahead of presidential elections in October. Pride is another factor. This is after all Latin America’s largest economy, its most populous nation and the region’s foremost diplomatic power. Chile and Mexico already belong – long a source of embarrassment in Brazilian trade and foreign policy circles.  

The lure of membership should force positive change and encourage Brazil to pursue reforms on the micro and macroeconomic front. Brazil’s tax code for example – which at 42,000 pages long can be a little off-putting to business – is likely to be an area where OECD officials will push hard for reform. A commitment to improved and transparent environmental policies as well will help to reverse the perception that Brazil is not too bothered about its international reputation. 

Some sectors believe that negotiators should take a harder line during the talks. A Brazilian ambassador commented, “I think that Brazil risks being too defensive in its negotiations with the OECD, especially on issues of environmental concern which is one of the key sticking points. We have one of the cleanest energy matrices in the world, allied to agriculture with technologies that prevent deforestation. We should demonstrate that we are already advancing significantly on the climate issue, and this is not just an effort by the government, but a joint effort with the private sector.”

“I think that Brazil risks being too defensive in its negotiations with the OECD, especially on issues of environmental concern which is one of the key sticking points.”

Ambassador, Brazil

Remember too that this is a highly political process – France will oppose Brazil joining the OECD as long as Bolsonaro is in office. A cynic might say that the OECD is exercising a carrot and stick policy towards Brazil. Let’s assume that this is true – both sides stand to gain. The OECD welcomes Latin America’s powerhouse and leader of the global south – Brazil strengthens its economic and political clout whilst investors see a government more determined to close ESG gaps that for too long have disincentivised investment. Not a bad deal you’d be right to think.  

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