MercoPress. South Atlantic News Agency

Bolsonaro and Macri agree to “review and perfect” Mercosur, and advance trade talks with EU

The two leaders meeting for the first time underlined their opposition to Venezuela's authoritarian regime, and Macri called Nicolas Maduro a “dictator”

Brazil’s president Jair Bolsonaro and Argentina’s president Mauricio Macri said they agreed to continue integrating their economies (number one and two in South America), as strategic partners, by “perfecting” the Mercosur trade block and pressing ahead with negotiations that are already underway, such as the ongoing free trade and cooperation agreement with the European Union.

The two leaders meeting for the first time, and the first foreign visitor received by Bolsonaro since taking office, also underlined their opposition to Venezuela's authoritarian regime, and Macri going further and publicly calling president Nicolas Maduro a “dictator”.

Bolsonaro’s commitment to Mercosur contrasted with his criticism of the customs union during his election campaign, when he said it had become a leftist political forum and not a tool to boost trade.

But since taking office on January first, Mercosur two largest members are working in tandem on conservative agendas of free-market, business-friendly reforms and the strengthening of democracy in the region.

Bolsonaro and Macri agreed on joining the United States in ramping up pressure for democratic change in Venezuela, whose leftist-populist government they consider out right illegitimate, and only recognize the president of the elected National Assembly.

“Our cooperation with Argentina on the Venezuelan question it the clearest example of a convergence of positions and shared values,” Bolsonaro said after meeting with Macri.

Argentine Foreign Minister Jorge Faurie said the only legally constituted power in Venezuela was the opposition-run Congress, National Assembly, whose leader the Trump administration is considering recognizing as the country’s legitimate president.

Macri and Bolsonaro “agree we want to defend freedom and the recovery of democracy in Venezuela,” Faurie told reporters.

Argentina and Brazil also signed a new extradition treaty to increase their cooperation in fighting organized crime, drug trafficking, corruption and money laundering.

In a joint statement, the presidents vowed to review Mercosur’s common external tariff, improve access to markets and move forward with trade facilitation and regulatory convergence.

Brazil is Argentina’s largest trade partner and Argentina is the main destination for Brazilian manufactured goods. But trade often took a back seat during leftist governments in both countries during the last decade and a half.

There has been a big drop in trade flows in recent years, when Argentina exported less to Brazil and Mercosur, as a whole, became less important to Brazil as a percentage of its global trade, dropping to 8.7% last year from 10.8% in 2011.

Bolsonaro would like to see more flexible rules allowing Brazil to negotiate bilateral agreements outside the bloc, which current rules limit. His economy minister Paulo Guedes has said Mercosur restricts Brazil too much and would not be a priority. A similar comment was made by Agriculture minister, Tereza Cristina Dias.

“Brazil will be a strong ally in building an integrated region,” Bolsonaro said. “We are confident Mercosur can be modernized.”

This could happen with two presidents who want to revamp the trade block, said Oliver Stuenkel, assistant professor of International Relations at the Getúlio Vargas Foundation in São Paulo.

“There is an opportunity because now we have two governments that agree it has not delivered and there is a need to re-energize Mercosur or whatever takes its place,” Stuenkel said.

Wednesday’s presidential meeting in Brasilia showed Mercosur is still high on Brazil’s agenda. Macri did not attend the inauguration of Bolsonaro, alleging political reasons although he was enjoying holidays in Patagonia. Diplomatic sources admitted Argentina wanted to express its discomfort with the incoming Brazilian administration since Bolsonaro anticipated his first overseas trip would be to Chile and the most successful example of a market friendly and open market economy in South America.

History and tradition indicate that in Argentina and Brazil, incoming presidents first overseas visit is to their strategic partner, over coming decades of dispute and rivalry of leadership in South America.