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Brazil can't be hostage of Argentina or Venezuela in Mercosur/EU trade negotiations

Wednesday, January 29th 2014 - 22:38 UTC
Full article 48 comments
Former ambassador and trade expert Rubens Barbosa says Friday meeting of Mercosur Council is decisive  Former ambassador and trade expert Rubens Barbosa says Friday meeting of Mercosur Council is decisive

The Brazilian government is determined to advance with negotiations for a trade agreement between Mercosur and the European Union even if it means leaving Argentina for a second phase of the process, according to sources from Itamaraty, the country's foreign ministry, reported in the Rio do Janeiro media.

 “There is great expectation as to what will happen next Friday in Caracas during the meeting of the Mercosur council, when Argentina is scheduled to give a reply on the issue”, according to the sources which underlined that Brazil should propose to the Europeans that negotiations continue normally so that the negotiating process is no longer 'stalled or trapped'.

On Friday Mercosur negotiators must decide on the joint proposal to present the EU, or if they prefer to have separate proposals. The prevailing opinion is that Brazil, Paraguay and Uruguay discuss without Argentina, which would later on join the negotiating process. Although Argentina prefers to make a joint proposal, “they have difficulties in reaching an agreement with the EU”, something which has worsened because of the current foreign exchange situation faced by the country.

According to the president of the Foreign Trade Council from the Sao Paulo Federation of Industries, FIESP, former ambassador Rubens Barbosa, the meeting in Caracas is very important since it will definitively signal de Brazilian position. Barbosa anticipated that FIESP would support the government's decision.

However, “Brazil can't be hostage of Argentina or Venezuela”, said the former Brazilian ambassador in the United States.

There is no way Brazil can negotiate an agreement with the EU on its own since they are precisely based on the principle of a blocks agreement. Nonetheless Venezuela will be out of the negotiations since it only very recently became a full member of Mercosur. But for the Brazilian team, Argentina has not shown much willingness in improving its proposal, which is considered incompatible for the rest of full members.

The Brazilian proposal anticipates an elimination of import tariffs for 87% of European produce. Uruguay and Paraguay are even more ambitious, 90%, but Argentina's position is in the range of 80%. Likewise the speed to implement those reductions is much slower than that suggested by the remaining members of the group.

Negotiations for a free trade and cooperation agreement between Mercosur and the EU took off in 1999, stalled in 2004 and were resumed in 2010. In February negotiators from the two blocks will meet to present their proposals.

“We are prepared to present our proposal to the Europeans with or without Argentina”, insisted the Itamaraty sources adding that the Brazilian government does not believe the hard currency problems faced by Argentina and Venezuela “will contaminate the rest of Mercosur members”.

Top Comments

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  • LEPRecon

    Yup, don't let Argentina bring the rest of you down.

    Make the agreement, and when the next (and hopefully more sensible) government is in place in Argentina, then they can sign up for 'phase 2'.

    It looks like Mercosur is about to become a 2-tier organisation. One tier with successful economic policies and another tier with the basket case voodoo economic policies.

    Jan 29th, 2014 - 11:03 pm 0
  • ilsen

    Shame that Brazil can't negotiate sole with EU as a new trade agreement could be beneficial for both. MercoSur is being dragged down by the “hard currency problems faced by Argentina and Venezuela [that] “will contaminate the rest of Mercosur members”. ”

    Jan 29th, 2014 - 11:03 pm 0
  • yankeeboy

    Brazil will make its own agreement with the EU in violation of its MercoSur agreement and all the other members will ignore it because without Brazil there is no Mercosur.
    Silly Marxists don't understand trade....

    Jan 29th, 2014 - 11:04 pm 0
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