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The United Kingdom made a proposal for an Enhanced Trade Partnership (ETP) to Brazil, but the Foreign Affairs Ministry, known as Itamaraty, and the Ministry of Economy were disappointed with its terms and resist taking these negotiations forward. For the Jair Bolsonaro administration, the offer is unbalanced and contemplates the interests of London, but ignores the main demands on the Brazilian side to increase exports to the British market.
As diplomatic sources explained to Valor, Brasília was interested in opening negotiations for a free trade agreement, but the United Kingdom gave several reasons to reject the possibility. There would be a lack of people in the technical area to remake a network of post-Brexit trade agreements and uncertainties about the Mercosur’s dispositions. This year, for example, marks the 40th anniversary of the Falklands War — a sensitive topic in Argentine politics. In Brazil, the presidential elections reinforce doubts about the future of the customs union.
On the other hand, the British expressed their intention of an Enhanced Commercial Partnership, where it would be possible to negotiate what they called “low-hanging fruits”. London initially considered an announcement about the launch of negotiations on 31 January.
The divergence over the partnership’s coverage radius, however, made this attempt unfeasible. The Itamaraty considered the British proposal unacceptable. The economic team also made criticisms, but is still trying to find some ways that allow it to evolve.
In addition to the simplification of customs procedures, which is an initiative that both sides approve, other points presented by the United Kingdom were: greater access to financial services and higher education, government procurement (opening in public tenders) and “life sciences” (term little used in commercial jargon, which was understood in Brasília as the entire area of medicines and the protection of patents related to these products).
The Brazilian government’s major complaint is about London’s refusal to include sanitary and phytosanitary measures at the table of discussions. The UK imports around 70% of the food it consumes. About half of that comes from its former partners in the European Union.
Even with Brexit, these countries continue to have a zero rate to export to the British market. However, many producers in the EU had already become so unaccustomed to customs procedures – because of the common market – that they prefer not to mess with all the bureaucracy of foreign trade and end up not exporting.
This was seen as an opportunity, in theory, for greater participation of Brazilian food in the country. Brazil already sells products such as meat, fruits and nuts, juices, and roasted coffee to the local market. However, producers face restrictive quotas to export chicken meat to the UK. There is no access for pork, fish and dairy products.
What irritates the Brazilian government most are the barriers for meat. The British inherited rules from the EU, which was interpreted in Brasilia as something reasonable at first, given the complexity of designing new rules. Years after the Brexit, however, the Itamaraty and the Ministry of Economy believe that there was already time to reformulate sanitary measures.
One of the complaints concerns the so-called pre-listing system, by which a slaughterhouse receives immediate approval to export without the need for prior individual inspections, unit by unit. The EU had a pre-listing system with Brazil, but it was suspended in 2017, as a reflection of Operation Weak Meat.
The Europeans kept the prior inspections, but the UK no longer has the obligation to follow EU rules and the Brazilian government argues that that episode is over. It also protests against the existence of a control by sampling of all batches of meat that arrive in the country.
In the evaluation of authorities in Brasilia, if there is an expanded trade partnership with unbalanced results and privileging issues of interest to the United Kingdom, the British will completely lose their appetite for negotiating a free trade agreement in the future. There are also complaints that, while refusing to discuss agriculture with Brazil, London has concluded a treaty with Australia and New Zealand – two major food producers – that covers these points.
For a British government source, the criticism is unfair because those sanitary and phytosanitary measures are regulated by an independent agency and cannot be negotiated in this way. The source also mentions that India had an ETP-type partnership with UK and then started negotiating free trade.
“We have a window to move forward in the coming months and Brazil should not look at this as a zero-sum game. It is just a start,” says this source.
Source: Valor International