MercoPress. South Atlantic News Agency

Brazil insists in trade agreements and closer ties with Pacific Alliance, despite Mercosur

“Brazil's trade strategy targets productive integration with Latin America and multilateral agreements with EU US and China” says minister Borges

Brazil confirmed that it will try to bring forward to 2016 the free trade agreement with Chile, Peru and Colombia, scheduled for 2019 and underlined the need for Mercosur and the Pacific Alliance to converge as part of the region's productive integration process.

 “Brazil's trade strategy targets productive integration with Latin America and multilateral agreements with the European Union, United States and China, the country's main trade partners”, said Mauro Borges, Development, Industry and Foreign Trade minister addressing a trade forum in Rio do Janeiro.

“Brazil can't be an importing country, we need to be vigorously exporters and our trade strategy is to double in a few years our export numbers”, added Borges.

For this purpose the Brazilian commercial policy is based on strengthening relations with South American countries and with those considered the main trading partners such as the EU, US, China and Japan.

To this purpose ”an integral association between Mercosur and the Pacific Alliance (Chile, Peru, Colombia and Mexico) countries is a target and thus “Brazil's proposal to advance to 2016 the opening of a free trade agreement with Colombia, Chile and Peru”.

However it is interesting to point out that the Pacific Alliance also includes Mexico and not a word is mentioned to that respect. In effect Brazil and Mexico, number one and two Latam largest economies are in open competition for leading Latin America, politically and economically, and attracting the most foreign investment.

These last few years the exceptional value of Brazilian commodities and a strong currency turned the country into the leading economy, while Mexico, highly dependent on the US suffered the consequences of the slower growth of the world's number one economy.

But currently the US is rapidly recovering, and so is Mexico with exports to Nafta associates while Brazil is facing several years of poor growth, declining export prices, a less dynamic China and weaker currency. It should not come as a surprise, following the reforms implemented by Mexico that the country could soon become the largest economy in Latin America.

A few weeks ago the Under Secretary for South American affairs in the Brazilian foreign ministry, Antonio Jose Ferreira Simoes advanced the idea of Mercosur closer ties with the Pacific Alliance as official policy.

However he also admitted that in effect closer links and integration depends not only on Brasilia, but also on a consensus from the other members, Argentina, Paraguay, Uruguay and Venezuela, which is not always readily available. And this despite the growing demands from Brazilian manufacturers and farmers.

In effect during the Mercosur summit in Caracas last month Brazil sponsored the initiative of convergence with the Pacific Alliance, but the issue although in the agenda, “was not addressed”.

Brazil in two months time will be holding presidential elections and Dilma Rousseff is bidding for re-election. The weak Brazilian economy performance has become a campaign issue as has been the constraints that the Mercosur consensus clause puts on Brasilia's attempts to reach trade and investment agreements with third parties.

Uruguay and Paraguay with small economies that need to open to the world support the Brazilian position. Argentina, fighting the world, is rather reluctant.