The warnings of Roberto Azevêdo, the Brazilian who headed the WTO

Unpredictable tariffs threaten the stability of global trade, warns Roberto Azevêdo , former director-general of the World Trade Organization ( WTO ) and now global president of operations at Ambipar.

In an interview with Lisboa Connection, a videocast about Brazil and Europe on the Amado Mundo channel, the diplomat drew parallels between the current scenario and the 1929 crisis, discussed the risks of dismantling multilateralism, and assessed the challenges of international trade.

Azevêdo, who after the WTO was vice president of PepsiCo, also analyzed the conditions and impact of the agreement between Mercosur and the European Union: "Protectionism reduces the potential for mutual gains."

Read the main excerpts from the interview below or see the full text at the end of the text.

What was it like dealing with US criticism and tariffs on the WTO during Trump's first term?

The criticism from the United States came in very vague terms. It was difficult to understand what the problem was for them, because Trump was in his first term and unknown. His trade, political, and economic ideologies were a mystery to analysts. We didn't know how, once in office, he would follow through on the ideas he had put forward as a candidate. Republicans advocate free trade, low tariffs, and less government intervention. His messages, however, were mixed. I adopted a listening posture, to better understand what they wanted. We were facing a new element, a factor that could challenge the entire system, which is what we see today. I sought a good relationship with the USTR, Bob Lighthizer. We spoke in Washington and then in Paris, at an OECD meeting. There, he told me, "I'm on board." From the beginning, there was mutual trust. Whenever he asked for something, I honored it. He'd say, "I'm going to have to give you a few hits in the press," and I'd say, "Don't worry, you can hit me, you know I'll kick you back." He'd say, "No problem, we understand each other." It was a good relationship in that regard, despite their busy schedules.

What is the WTO and why is it important?

The WTO succeeded the GATT (General Agreement on Tariffs and Trade), created after World War II with the World Bank and the IMF. The GATT limited tariffs and established the most-favored-nation principle, operating through rounds of negotiations until the Uruguay Round in 1995, which gave rise to the WTO. The new development included services, intellectual property, and agriculture, and created a mandatory dispute settlement system with the possibility of retaliation. Today, there are over 160 members, and decisions are made by consensus.

With multilateralism in disarray, what is your view on the direction of global trade?

It's difficult to answer, because it depends not only on what the United States does, but also on its reactions. In 1929 and 1930, when the US raised tariffs during the crisis, the recession was already underway. The problem was retaliation: all partners also raised tariffs, and within four years, two-thirds of world trade disappeared, worsening the recession. Today, the risk is similar. Reactions vary by partner, but the unpredictability is the same. The tariff ceiling provided predictability and guaranteed investment, since transportation costs and tariffs were known. This security has disappeared: Trump changes tariffs from country to country. The principle of reciprocity has been abandoned. A significant slowdown is likely, in the US and worldwide, possibly accompanied by inflation. This will increase production and operating costs, which does not point to a positive outlook.

And the opportunities for Europe?

Europe needs to reduce its dependence on the United States, although this alliance has always existed through the strength of investment flows in both directions. Currently, it is quite protectionist in regulatory terms, which is natural for integration, but it needs to open up to the world. It will also need to assume a leadership role that the United States is failing to play, which will require internal coordination.

What about the Mercosur-European Union agreement? How might this impact Brazilian businesses?

It depends on how it's implemented. Turkey has an agreement with the European Customs Union, but it's full of exceptions and lacks predictability. Ideally, there would be greater security, especially sanitary and phytosanitary, to prevent outbreaks or technical barriers. Clear rules and bilateral inspections would help. Protectionism reduces the potential for mutual gains.

At a recent PlatôBR event in New York, economist Paul Krugman (Nobel Prize winner in Economics) was optimistic about Brazil. Do you agree?

This optimism about Brazil is common among foreigners. Outsiders look at the macro perspective and see Brazil as excellent: it doesn't suffer from natural disasters, it's a global food pantry with advanced technology, it has favorable geopolitics, and it interacts with different blocs. The potential is extraordinary; many say the country can't go wrong. But internally, pessimism prevails. Brazil is a master at shooting itself in the foot: it has a short-term vision, with politicians thinking in terms of two- or three-year cycles, not ten or twenty. Structural issues, such as the revolution in the labor market and the need for education reform, only bear fruit in the long term.

Today, you work in the green economy, leading Ambipar. How do you see this market?

Companies have already embraced this agenda. Waste, emissions, and environmental degradation are unsustainable. That's why they invest billions in circularity and the green economy. And these investments aren't at the mercy of three- or four-year political cycles. What may happen is that they talk less about it at certain times. Brazil has extraordinary potential. Our electricity matrix can reach 95% clean.

What about cultural and immigration protectionism, such as visa restrictions in the US and Canada?

Tensions in the labor market fuel political polarization, as we've seen with Trump and his base. These problems won't disappear any time soon. A byproduct is the search for enemies: blaming imports or immigrants, when in fact, two-thirds of jobs disappear because of technological innovation. Rethinking education and supporting workforce transition is crucial, but it won't happen overnight. Meanwhile, the rhetoric shifts to blaming foreigners or imported products, which fuels election rhetoric.