The powerful manufacturers lobby, Sao Paulo’s Industry Federation, Fiesp believes a free trade agreement between Mercosur and the European Union is very much needed so that Latam’s largest economy climbs out from the “commercial isolation” in which it currently stands.
“Dealing with the EU is not going to be easy, it will take time but for the private sector, but it will mean climbing out from the isolation we have been in for the last twelve months”, said Rubens Barbosa, head of Fiesp Foreign Trade superior council following a meeting with EU ambassadors in Brasilia to address the issue.
Contrary to other Latam countries such as Mexico and Chile, which have a long list of trade agreements, Brazil has only signed three in over a decade, and with Israel, Egypt and Palestine, pointed out Barbosa.
For Fiesp an agreement between the EU and Brazil would mean an ‘important stimulus in the value global chains integration strategy’, which enable to reduce tariffs and promote reciprocal investments and services’ transactions’.
“It’s important for negotiations to advance” added Barbosa who emphasized it was unbearable that “negotiations are again stalled because one or two (Mercosur) countries are reluctant to participate”.
EU chief delegate in Brazil, Ana Paula Zacarías said that both blocks are going through ‘the most sensitive of negotiations’ and trusted that before the end of the year improved proposals for opening trade will be presented.
Zacarias also made reference to the internal differences in Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela) and underlined that “they must find their own path and verify which is the best proposal they can come up with”.
The EU and Mercosur resumed in May 2010 in Madrid negotiations for an ambitious association accord based on cooperation, political dialogue and trade liberalization. Negotiations were first launched in 1999 but were suspended in 2004 because of lack of advances.
Since 2010 the two sides have held nine rounds of negotiations centred in trade rules but without entering the markets’ access issue. Some of the main obstacles to reach an agreement are because Mercosur is calling for a greater opening for its farm produce, while the Europeans want something similar but for manufactured goods and services.
Besides this, the EU recession and lack of leadership, plus divisions among Mercosur countries regarding promotion of local industries and opening of markets have continued to stall the talks.
However Brazil is urged because in 2014 it will lose some significant EU tariff benefits since the country now has a ‘middle class’ country per capita income.