Mercosur and the EU continue to work technically on the bi-regional agreement

11/01/2022

---

Ursula von der Leyen — Foto: Jean-Francois Badias/A

The European Union signaled its opposition to president-elect Luiz Inácio Lula da Silva’s intention to change the Mercosur-EU agreement.

On Saturday, the day before the runoff vote, Mr. Lula da Silva published an article in the Paris-based newspaper Le Monde saying that “improving the terms of the Mercosur-European Union agreement will allow us to increase our trade, deepen the bonds of trust and strengthen the defense of our common values.”

In his first speech after his victory in the presidential race, on Sunday, Mr. Lula da Silva warned that he wants to “resume relations with the United States and the European Union on new bases.” And that he was not interested in trade agreements that condemn Brazil to be an eternal supplier of commodities.

When asked by Valor, the EU answered Monday with a clear “no” to Mr. Lula da Silva’s idea, saying that the focus should now be on working towards the implementation of the negotiated understanding.

“We believe that the agreement negotiated with Mercosur is very beneficial for both parties and will provide a framework for strengthening political and sectoral cooperation, trade and sustainable development,” said Mirian Ferrer, EU’s spokesperson for Trade and Agriculture.

“We look forward to engaging with the Brazilian authorities, as well as with the other Mercosur countries, to bring the ongoing process to a successful conclusion (of the agreement). We are notably seeking to strengthen our cooperation on sustainability and deforestation through an additional instrument,” she added.

Mr. Lula da Silva’s idea, which means eventually reopening the trade agreement, had already been cited by him during a trip to Europe before the election campaign. The president-elect suggested that Brazil should get more concessions, for example in the industrial front, and not limit itself to slight gains in agriculture, sources say.

But Brussels indicates that nothing will change. A source from the bloc reiterated that “in principle” it is unlikely to change. The Europeans are still talking about sending to Mercosur a call for an additional commitment against deforestation by the end of the year. This European document is still in the making in the European Commission, and has not yet been sent to the 27 member states, sources in Brussels say.

Reopening the Mercosur-EU agreement, after complicated negotiations over 20 years with interruptions, means continuing to delay an improvement in bilateral trade conditions for companies on both sides against a particularly tense geopolitical backdrop.

Mercosur and the EU continue to work technically on the bi-regional agreement, recently closing issues such as geographical indications. Nobody expects anything to move forward soon, not least because the president-elect’s transition team will have other priorities.

In Brussels, the president of the European Commission, Ursula von der Leyen, in a recent speech to the European Parliament, failed to mention Mercosur when talking about trade agreements. She cited new updates of agreements with Mexico and Chile, but these two are not going to come out any time soon either.

People within the Bolsonaro administration believe that Brazil’s private sector has not asked to reopen what has already been negotiated with Europe. And that Argentina’s President Alberto Fernández, aware of the fragility of its economy, is the one willing to review the understanding.

Plus, some people in Brasília feel that the Europeans made a mistake by failing to close the agreement with Mercosur as soon as possible and to accelerate Brazil’s entry into the Organization for Economic Cooperation and Development (OECD).

The prevailing assessment is that European governments, in order to satisfy some segments of the population that demanded more emphasis on the environment, have antagonized too much the relationship, especially with Brazil. As a result, European companies that want to invest more in the region do not have the advantages they could have through the bi-regional agreement, for example.

*By Assis Moreira — Geneva

Source: Valor International

https://valorinternational.globo.com/