Itamaraty will respond to the European Union ‘in a few days’ – 7/3/2023 – Market

Brazilian Chancellor Mauro Vieira said that he will present “in a few days” a response to the letter from the European Union that proposes new environmental requirements in the free trade agreement negotiated more than two decades ago between the European bloc and Mercosur.

“In a few days, we intend to present for everyone’s examination a counter-proposal of reaction to the additional letter from the European Union, with the aim of unlocking the bi-regional negotiation”, he spoke this Monday (3) during a meeting of Mercosur ministers in Puerto Iguazú, side Argentinian of the Iguazu Falls.

Vieira listed the conclusion of the agreement as one of the country’s priorities when assuming the rotating presidency of the group, shortly after the semiannual summit of presidents this Tuesday (4). “[Nos próximos seis meses]we intend to work intensively with those partners whose negotiations are at an advanced stage, such as the EU, to explore the opportunity to close agreements that are in tune with the demands of the current world context”, he declared.

Itamaraty had already indicated that it was finalizing a position and that the long-awaited proposal was “very close”. Maurício Lyrio, secretary for economic affairs at the ministry, said last Thursday (29) that “the government is translating President Lula’s instructions into a document that will be presented first to Mercosur partners, and then to the European Union.”

A consensus text between the four member countries —Brazil, Argentina, Uruguay and Paraguay—, however, will not come out of this summit, which does not include Venezuela, suspended since 2016. “It is a process that is not so fast because the agreements are very delicate and have demanded a very intense internal coordination work”, stated Lyrio.

About three weeks ago, the president of the European Commission, Ursula von der Leyen, signaled that she was waiting “with impatience” for an official return from Brazil, during a meeting with Luiz Inácio Lula da Silva (PT) in Brasília. She stated that she wanted to end the agreement as soon as possible, “by the end of the year at the latest”.

Officially negotiated since 1999, the document was completed in 2019, in the first year of the Jair Bolsonaro (PL) government, but has not yet been ratified by the two blocs. The main impasse for this is an annex to the text, called a “side letter”, proposed by the Europeans at the beginning of this year, which would make mandatory some environmental commitments that would previously be voluntary.

While Europe wants to ensure that the export of commodities with environmental problems is seen as a sanctionable violation, the Brazilian government considers the conditions too strict and the tone of criticism has been rising. “It is not possible for there to be an additional letter threatening a strategic partner”, repeated Lula in France, a week ago.

Another point of the agreement that the PT has publicly insisted on reviewing is government purchases. This chapter provides for “national treatment” for foreign suppliers contracted by the States, but also has several exceptions to protect national companies. Still, Lula and especially the Argentine Alberto Férnandez see damage to their industries.