Brazil takes the lead in Mercosur: see the trade agreements being negotiated and their situation
The bloc known as Mercosur comprises Brazil, Argentina, Paraguay and Uruguay. In addition to these countries, there are also Associated States, such as Colombia, Bolivia and Chile. Venezuela, although it was a member of the bloc, has been suspended since 2017.
Flags of Mercosur countries - Photo Reproduction/Juan Mabromata/AFP
On Tuesday (04), there will be the transition of the Mercosur presidency to Brazil during the summit of the bloc's heads of state in Puerto Iguazú, Argentina. Mercosur, composed of Brazil, Argentina, Paraguay and Uruguay, was established in 1991, and the bloc's leadership rotates, lasting six months for each member country. In addition to the Member States, there are also Associate States, including Colombia, Bolivia and Chile. Since 2017, Venezuela has been suspended from the bloc, but Brazil has defended its return to the group.
The Mercosur block
O Southern Common Market (MERCOSUR) was established as a regional intergovernmental organization on March 26, 1991, based on the Treaty of Asunción. Its main objective is to promote regional integration, initially focused on economic aspects and later moving towards the creation of a customs union. This customs union implies free trade between member countries within the zone and a common trade policy.
Currently, MERCOSUR is in the process of expansion, with Bolivia awaiting parliamentary ratification of its accession protocol as a full member. For the document to enter into force, it is necessary to obtain legislative approval in Brazil, as the other parliamentarians have already approved it.
As of January 1, 1995, this area evolved into a customs union, in which all signatory countries began to apply the same tariffs on imports from other countries (common external tariff).
G20
In the second half of this year, Brazil will take the lead not only in Mercosur, but also in the G20, which encompasses the main global economies, and the United Nations Security Council. According to Maurício Lyrio, secretary for Economic and Financial Affairs at the Ministry of Foreign Affairs, the main trade agreements that Mercosur is negotiating are with the European Union, FTA, Canada, Singapore, Indonesia and Vietnam.
Agreements
European Union - Negotiations for an agreement with the European Union began in 1999, with the conclusion of the commercial part taking place in 2019. The political and cooperation parts were finalized in 2020 and, since then, the agreement has been under review. However, the Brazilian government considers the inclusion of an additional document by the European side to be a threat. This document establishes sanctions in case of non-compliance with environmental targets, among others.
Brazil considers the imposition of sanctions inappropriate, since there has been a change of government. It is anticipated that, starting this week, Brazil will write a letter to the other members of Mercosur in response to the European Union on this issue. The country expects to finalize the negotiations by December this year, taking advantage of Brazil's leadership in Mercosur and Spain's representation on behalf of the European Union, both countries involved in the negotiations. Once approved by member countries, the letter will be sent to the European bloc.
Canada - Negotiations for a trade agreement between Mercosur and Canada began in 2003 and, after a year, the talks themselves began. However, after three rounds of negotiations, the discussions were interrupted due to disagreements between the parties. In addition to trade issues, the blocs also addressed topics such as competition, regulations, measures to support small and medium-sized companies, indigenous rights, the environment, intellectual property and government procurement (Brazil argues that the government should encourage national industry through these purchases ).
Singapore - Negotiations between Mercosur and Singapore began in 2018, with negotiation rounds starting in 2019. According to secretary Maurício Lyrio, from Itamaraty, the current stage of negotiations is significantly advanced. The Brazilian government points out that the agreement covers a variety of topics, such as services, investments, government purchases, intellectual property, sanitary and phytosanitary measures, as well as trade defense.
Indonesia and Vietnam - According to Maurício Lyrio, although there are ongoing negotiations, trade agreements between Mercosur and Indonesia, as well as with Vietnam, are of great importance, however they are not yet in advanced stages. Negotiations with Indonesia were started in the year 2021, while the "exploratory dialogue" with Vietnam was concluded in 2020.
European Free Trade Association (EFTA) - The agreement with EFTA was negotiated in 2017 and concluded in 2019, involving four European countries that are not part of the European Union: Norway, Switzerland, Iceland and Lichtenstein. However, although there have been ten rounds of negotiations, there are still some technical issues to be resolved, which prevents the finalization of the agreement so far.
According to Mercosur's official website, trade between the bloc and the EFTA countries has an approximate value of US$ 7 billion per year. According to the Itamaraty, it is estimated that the agreement with the association will result in an increase of US$ 5.2 billion in the Brazilian Gross Domestic Product (GDP) over 15 years. The agreement covers a variety of issues such as services, investment, government procurement, trade facilitation, customs cooperation, sanitary and phytosanitary measures, sustainable development and intellectual property.
