EU– MERCOSUR: it won’t be a new Methuen Treaty

Opinion: Professor Santiago Martin Gallo Avalos Dupuy de Lôme,

International Consultant and Advisor to the Brazilian Delegation at the MERCOSUR Parliament

The future of the negotiations on a free trade agreement between the European Union (EU) and Mercosur are on the agenda for the second half of the year. The President of Eurolat (the Euro-Latin American Parliamentary Assembly) will be coming to Brazil for a meeting with Senator Roberto Requião de Melo e Silva, President of the Brazilian Delegation at the MERCOSUR Parliament in September or October (not yet confirmed). The idea is to try to boost the negotiations, discuss to what extent the EU will open up and how parliamentarians can make an effective contribution to bringing the two blocs, MERCOSUR and EU, politically, economically and socially closer.

Mercosul-UE

Photo: Divulgation

The pragmatism that governs international relations will be the basis for the free trade agreement being negotiated by MercosuR and the EU. The negotiations will have to cover the basis rules on trade and investment. Our aim is far from a repetition of the “give and take” set out in the three articles of the Methuen Treaty, known as the shortest document in the history of European diplomacy. It was basically a barter agreement in which the Portuguese undertook to import British textiles and the British imported wines from Portugal in exchange.

Brazil and MERCOSUR are essential markets for the EU according to the European negotiators.  Services and the investments that can be made in strategic sectors constitute a very promising market for our European partners. Agriculture cannot be the base of the agreement though, because the EU’s Common Agricultural Policy shows a high degree of protectionism.

We must not forget that MERCOSUR is an important exporter of agricultural products and Brazil needs to keep an eye on its own partners, such as Argentina, which is the second largest market for manufactured products, such as cars and trucks.

Brazil is very aware that it is important to watch its neighbours.

The EU will find it very difficult to make a proposal, as the 28 countries are unable to reach an agreement due to the diversity of interests involved. The situation in the Latin American bloc is very different, as 95% of its products are ready to trade.

The EU countries’ main interest, besides agricultural products and the opening of markets like Brazil, Argentina, Paraguay and Uruguay[i], is in industrial products and sales agreements, which are real niches for European companies already operating in South America.

MERCOSUR should be based on food security and the defence of national interests and the agreement must be founded on these premises.

MercosuR’s members must ensure political sovereignty over their industrialisation and oppose a common agricultural policy.

The industrial segments in Brazil that could benefit from an agreement are the agricultural sector and processed agricultural products, such as meat, chicken and sugar.

What MERCOSUR has to offer is farming products and a market. One of its countries, Uruguay, can act as an intermediary, a way into the markets and a kind of tax haven.

What needs improvement is the great difficulty experienced by MERCOSUR in general and Brazil in particular in obtaining patents, as it takes an average of 18 (eighteen) years, as opposed to seven years in the United States. This shows us that we need to improve compliance with intellectual property legislation and means that we are losing investments and competitiveness in Brazil and the region as a whole.

Finally, MERCOSUR is a bit like a building being raised during an earthquake. It is not perfect and needs to be flexible as realities are different.

MERCOSUR is an integration project designed for the future generations of its member countries. Today it is advancing pragmatically and PARLASUR, MERCOSUR’s Parliament, is already one of the first signs of its supra-nationality. PARLASUR is vital in consolidating a new stage in the integration process and lending legitimacy to citizens’ participation in it.

[i] Venezuela and Bolivia are part of MERCOSUL as observers in the negotiations today, but nothing will be done without their agreement.