It is possible that the four Mercosur countries can reach a common offer to the European Union (EU) until June and therefore both blocks could exchange offers by the beginning of next month. This would lend continuity to negotiations on the Free Trade Agreement between the EU and Mercosur, says EUBrasil Association president, Luigi Gambardella.
“We know that there are only a few points on which only one Mercosur country has to improve its offer to raise the block’s average, given that the other countries in Mercosur have already tabled offers with a level of above 90% of liberalization, which is the minimum agreed with the EU”, says Gambardella.
“A free trade agreement between EU and Mercosur could free up welfare gains both for consumers and businesses. Thanks to the EU-Mercosur agreement, trade between the regions could increase significantly. This could be followed by enhanced investment in both directions. Tariffs and non-tariff barriers are holding back significant amounts of trade and investments and depriving consumers and exporters of considerable benefits”, according to Gambardella.
“High tariffs on several agricultural products are maintained at the European borders, keeping Mercosur producers from supplying the European market at competitive prices. In the same way, tariffs and non-tariff barriers on European manufactured goods are reducing the opportunities for Mercosur consumers to buy some of their preferred goods”.
According to the report from Copenhagen Economics “An evaluation of the barriers to trade and the investment between the EU and Mercosur”, an ambitious free trade agreement between the EU and Mercosur, comprising comprehensive tariff removals, a noticeable reduction of non-tariff barriers on manufactured goods and a reduction of services and investment barriers, could increase the EU’s GDP by 15 to 21 billion Euros (corresponding to a 0.2 percent increase) and the Mercosur countries’ GDP by 2 to 3 billion (corresponding to up to a 0.3 percent increase). The president of EUBrasil says: “Brazil has a great opportunity to benefit from more European investment but runs the risk of losing competitiveness if it does not involve itself in bilateral negotiations”.
Alfredo Valladão, President of the Advisory Board of EUBrasil and professor in the Paris School of International Affairs (PSIA) and in the Institute of Political Sciences in Paris, argues that it is important for the private sector to continue to support an agreement between the EU and Mercosur.
According to Valladão, Brazil should take pride in the enormous progress achieved in recent years but cannot afford the luxury of staying out of global trade agreements if it wants to improve its economic and political position in the world.
“Other blocks continue to work on and advance negotiations, such as the United States and the EU, the US and its partners in the Pacific and Japan and the EU, etc. It is very important that the Brazilian Government maintains its strong commitment with these negotiations despite the coming elections in October”, notes Valladão.
“Brazilian industry supports the EU-Mercosur agreement and should continue to express this to the government in order for it to seize this opportunity. The world continues to work and make progress: everyone is negotiating between themselves”, affirms Valladão.
Numbers: Europe is Brazil’s biggest commercial partner making up 22% of its trade. It is also the biggest foreign investor in the country with more than 40% of total investments coming from it.
Important Dates: The countries of Mercosur (Brazil, Argentina, Paraguay and Uruguay) will try, on May 7th, to close a common offer which the South-American block will propose to the EU within the scope of the negotiations on the Association Agreement.