A month after a meeting marked as decisive in the integration between the blocs, the Brazilian government became irritated with the environmental demands approved by the European Parliament. Despite the recent noise, analysts heard by RFI say the Covid-19 pandemic and the war in Ukraine paint a favorable scenario for the trade deal.
Raquel Miura, RFI correspondent in Brasilia
The weather has not been the best during the visit of the President of the European Commission, Ursula von der Leyen, to Latin America. The evaluation of the specialists and the Brazilian government is that, despite several obstacles, the agreement between Mercosur and the European Union (EU) now has everything to move forward, since the main leaders of the two blocs see opportunities in this rapprochement commercial and supply risk reduction. But the climate has soured after the EU decided to include in its list of requirements barriers to products from deforested land.
“The conditions for this agreement have never been more favourable. This is the moment! But now these sanctions would prevent the entry into force of the integration measures. And the European Union needs to change its attitude towards Brazil and reverse these measures Jorge Viana, president of APEX, the Brazilian Trade Promotion Agency, told RFI.
For Viana, the current government has already shown that it has reaffirmed its commitments to sustainable development and, therefore, there can be no talk of commercial punishment. “A president left who encouraged attacks on the Amazon, who did not respect the indigenous people or the conservation units. The Lula government arrived, which fights deforestation, works within the law, with social and environmental responsibility. This it’s enough”.
In Brasilia, after a meeting with the president of the European Commission, President Lula criticized the additional sanctions approved by the Europeans. In the Casa Rosada, the Argentine Alberto Fernández, somewhat more restrained, defended an approach that is not only good for the old continent. The European representative will be in Chile on Thursday and then will travel to Mexico. A meeting between the Latin American countries and the European Union is scheduled for July in Brussels.
“There is a strategy to create possibilities of application. But the green label is a wish and a value that goes beyond commercial issues. It implies other values, human, social and future designs that we want to build. For that there are forums and not the table where a trade bloc is discussed. Otherwise, by analogy, we could demand other things, such as data management, ethnic commitment and others,” Cristina Helena Pinto de Mello, an international economist at the Pontifical University of Sao Paulo, told RFI. PUC/SP.
The businessman and former Brazilian Minister of Development Armando Monteiro, who actively participated in the negotiations of several points of the agreement, told RFI that the approval of these environmental obligations is a punishment for Brazil and a jug of cold water at a time when the Negotiations are back on track. “It simply gets in the way. And at a decisive moment, I would say that even on the eve of this agreement coming out. This position of the European Union is not in line with the spirit of an agreement that aims to promote integration and precisely the future bases to advance on various topics.”
favorable scenario
Despite the criticism of the sanctions voted by the European Parliament, the Brazilian government’s effort is to close the agreement, whose negotiations have dragged on for 24 years, during Lula’s third government. And the projections in this case vary, from the most optimistic, who expect the agreement to be signed this year, to the most skeptical, who bet on a consensus towards the end of the mandate. The entry into force of the measures is another stage, since it depends on the approval by the internal bodies of the countries.
In addition to the election of Lula, who once again prioritized South America and the agreement with the Europeans, contrary to what his predecessor Jair Bolsonaro did, two world events helped build a favorable environment for trade negotiations between the continents. “The Covid-19 pandemic, the blockade, which disrupted the international production system. There were shortages of raw materials and products everywhere, showing the importance of having regional partners, not dependent on more complex transport logistics. This reinforces the importance of the blocs, such as Mercosur”, explained Cristina Mello.
The other situation came with the war in Ukraine, which also shook the supply network for products such as gas, oil and fertilizers, imposing on the European Union, a bloc already advanced in the integration process, the challenge of expanding trade agreements in the outside. “The war has revealed the problems of that regional trade of the EU. It has lit the light of the need for new agreements to reduce that fragility. In this way, I believe that we can expect progress in the negotiation with Mercosur,” he said mello.
The PUC economist, however, does not believe in such promising results in the short term, given the details surrounding an agreement of this magnitude. “I would speak not in months, but in years. And Mercosur has the challenge of expanding integration and improving its counterpart. If we access the European Union market, we access a more cohesive and integrated market. On the other hand, in South America we have not so integrated market”.
Armando Monteiro believes that it is possible to reduce the differences and consolidate an agreement between now and the end of the year, even in sensitive areas, such as subsidized agriculture in some European countries and Brazilian industry, which is not very competitive on several fronts. “I think it is possible. It is hard work, but it is possible to find solutions to these specific impasses. Brazil has a lot to gain from this agreement and it is important that it is signed soon because until it becomes effective, it takes some time.”
France: an obstacle?
Despite Brazilian optimism, sectors in France, especially agriculture, continue to reject the treaty. On Tuesday, French deputies approved by 281 votes in favor and 58 against a resolution that asks the government of President Emmanuel Macron to express its opposition to the pact if the Mercosur countries -Brazil, Argentina, Paraguay and Uruguay- do not respect various criteria health, environmental and climate regulations in force in Europe.
French lawmakers also want a clause to suspend its application if Mercosur nations do not respect the Paris climate agreement.
“We defend above all not ratifying this trade agreement (…), the last nail in the coffin of French agriculture,” said the far-right deputy Frédéric Falcon.
The government deputy Eleonore Caroit, the only one who spoke in favor of an agreement, recalled the strategic importance of a rapprochement between the two regions. “If France and the EU turn their backs on Latin America, do you know who will come? China and Russia,” warned the legislator.
open public procurement
An example of debate that is still open is government purchases, which are included in the trade agreement and are important tools for integration, given the purchasing potential of the public budget. However, in Brazil, government purchases are public policies aimed at supporting small and medium-sized companies, as well as stimulating local activity. In this case, Monteiro suggests that a way out is to establish limits, in percentage or value, to accommodate the interests of small businessmen, but without hindering the continental agreement.
“These points are small compared to the magnitude of this treaty. In the niches in which Brazil stands out, such as agribusiness, there will be short-term gains. In others, such as industry, the rate reduction will be gradual, more slow. This cushions the impacts and also stimulates the industry to modernise. And that’s not all. The agreement covers services and investment. Only, of course, the European Union has more investment potential, so there will be gains significant for Brazil,” Monteiro said.
The APEX president said that the technical and political staff of the countries involved have worked hard, together with producers and businessmen, to solve the obstacles, but that commercial cooperation at this level requires an understanding that goes beyond the immediate benefits. “It is something very complex that touches many interests. The only way for this agreement to really happen is to put aside the particularities and take into account the gains in the short, medium and long term. Now everyone has to be moderately unhappy So that within 15 years there will be profits for everyone.”
On July 17 and 18, the leaders of the two blocks will meet again, in Brussels, at the summit of the European Union with the Community of Latin American and Caribbean States (CELAC).
