Mercosur-EU: ‘If there is no agreement, be patient’, says Lula – 12/03/2023 – Market

“If there’s no agreement, be patient.” With this phrase, President Luiz Inácio Lula da Silva responded this Sunday (3) to statements by the President of France, Emmanuel Macron, who said this Saturday (2) that he was against negotiations on the agreement between the European Union and Mercosur.

Lula commented that he already knew that France had a more protectionist position and that Brazil cannot be held responsible if the agreement is not signed.

“It was not due to lack of will. The only thing that has to be clear is that they no longer say that it is because of Brazil and that they no longer say that it is because of South America”, said Lula this Sunday.

High-ranking members of the Brazilian government already take it for granted that negotiations with the European Union will end without an agreement, as Brazil will not give in to the new environmental constraints and it is unlikely that the Europeans will be able to articulate the positions of all the bloc’s countries in a week. .

“Take responsibility for the fact that rich countries do not want to make an agreement from the perspective of making any concessions. It is always about winning more. And we want to be treated with the respect of independent countries. Let’s see how it will happen on Friday [dia 8]. If there is no agreement, at least it will be clear who is to blame for not having an agreement”, said Lula.

On Saturday, Macron classified the agreement as “outdated” and incorporated the arguments of French agricultural producers into his speech, with strong representation from opposition congressmen in the country.

“If I can’t explain it to any European, I’m not going to defend it internationally. I can’t ask our farmers, our industrialists in France, and across Europe, to make efforts to decarbonize, to exit certain products, and then say that I am removing all tariffs to bring products that do not apply these rules”, said the French president, in reference to the disparity in environmental protection standards, which are stricter in France and the European Union than in Brazil.

This Thursday (7), there will be a summit meeting of Mercosur heads of state, in Rio de Janeiro. In recent days, negotiators from the South American bloc and the European Union have intensified negotiations to try to close the agreement by the event.

On Thursday (30), the Ministry of Foreign Affairs reported that there had been significant progress in the negotiations, although it was not possible to say whether this process would be completed by the Mercosur summit.

However, according to Reuters, people with knowledge of the negotiations say that South American countries should await a position from Argentina, which will have Javier Milei inaugurated as president on December 10. Milei has already stated, during the election campaign, that he is against the agreement and European authorities do not believe that he will change his position.

Negotiations began in 1999

Since 1999, Mercosur members and European Union countries have negotiated a free trade agreement. Talks were interrupted in 2004 and resumed in 2010.

The European Union is Mercosur’s second trading partner, after China, and the first in terms of investment. Mercosur is the European Union’s eighth largest extra-regional trading partner.

The agreement between the European Union and Mercosur (a bloc formed by Brazil, Argentina, Paraguay and Uruguay) was reached in 2019, after years of negotiations, but has not yet been ratified.

The delay is mainly due to Europe, with emphasis on agricultural protectionism and a movement by the bloc to include new terms in the agreement, such as environmental and climate requirements.

France has been one of the main forces opposing the agreement on its current terms. The French argue, for example, that products only enter the EU if they follow the same conditions that the bloc imposes internally. This could affect Brazilian agricultural exports, both due to the issue of environmental preservation and the use of pesticides banned in Europe.

On the other hand, the Spanish are considered by the Brazilian government to be in favor of the agreement, especially due to their proximity to Latin countries.

President Lula has already promised to conclude the agreement in 2023, but said that the current terms are impossible to accept, defending a renegotiation of the text.

The PT member has criticized what he classifies as “threats of sanctions” by the European bloc, unequal forces that would make Brazil just an exporter of commodities and the opening of public tenders for foreign companies (which would harm local producers).

In 2022, Brazil exported a total of US$50.9 billion to the European Union, with oil, coffee and soy being the main products sold, according to ComexStat (the government’s foreign trade platform). Conversely, the country imported US$44.3 billion from the bloc, mainly gasoline, fertilizers and vaccines.

Lula refused to renegotiate Europe’s environmental conditions. A Sheet found that, on the way to Dubai, the Brazilian president told Celso Amorim, the president’s main advisor on international affairs, that he would not make concessions. The president would have said that if the Europeans did not accept the agreement by the 7th [data da cúpula do Mercosul, no Rio]they would have to wait for the election of another government in Brazil.

_{With information from Ana Carolina Amaral, who traveled at the invitation of Avaaz, Instituto Arapyaú and Internews}

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_{What is the agreement?
Agreement will facilitate trade between Mercosur and the European Union, eliminating import taxes for more than 90% of goods traded between the blocs after a transition phase. It also plans to facilitate cooperation instruments in economic, social, environmental and industrial development}

_{Why is it important?
The agreement involves 31 countries and promises to help deepen relations with Brazil’s second trading partner and its main foreign investor. When completed, it is expected to form one of the world’s main trade areas, involving around 750 million people and 25% of the global economy.}

_{What will be the main impacts?
The CNI (National Confederation of Industry) estimates that more than 6,600 products will no longer have import taxes charged by the EU, and that 95% of all industrial goods will have import taxes zeroed within ten years}

What’s left to start in earnest?
The agreement needs to be ratified, but it still comes up against new environmental conditions requested by Europeans, as well as disagreements from the Brazilian government regarding damage to the country’s reindustrialization