MercoPress. South Atlantic News Agency

Brazil and South Korea share it's a good moment to advance with the Mercosur agreement

Getúlio Vargas’ Center for International Prospecting and Intelligence report and a similar one from Korea Foundation, the time is appropriate for an ambitious integrated agreement with the block.

Brazil's leading think tank, Getulio Vargas Foundation, believes that in the current global trade situation with bottlenecks, shortages of inputs and transport challenges there is a great opportunity to reach an integral trade agreement between Mercosur and South Korea.

According to the Intelligence Unit from the Vargas Foundation, trade treaties involve issues that go beyond strict commercial aspects such as tariffs and involve non tariff barriers, services, government procurement, effective technical and technological cooperation, including even a bilateral fund to ensure joint R&D projects in essential sectors.

The IU adds that resilience to supply shocks and production redundancy are factors to take into account in the current situation of the global value chain organization with bottlenecks and disruption, which are estimated to last longer than current forecasts.

These are some of the points in the report elaborated by the Getúlio Vargas’ Center for International Prospecting and Intelligence together with the Korea Foundation, which also plans ahead into the mid and long term.

Experts from South Korea and Brazil that currently holds the Mercosur chair met to elaborate possible strategies and mechanisms to help make the trade agreement viable. In 2018, the agreement began to be formally drafted and the last round of negotiations took place in September last year.

The experts’ study, which included meetings and discussions with government leaders, gave birth to two reports. The first focuses on global value chains, while the second focuses on regulatory reforms in the possible different scenarios..

Leonardo Paz Neves, a political scientist, and coordinator of the FGV research center, explained that benefits of a deal between Mercosur and South Korea go beyond trade. In fact, “a treaty with one of the ten leading economies of the world, particularly dynamic would play and an important role, --and boost--, since the bloc has few agreements with economically relevant countries, and negotiations with the European Union have stalled”.

According to Paz, the agreement with Korea can feature greater sophistication, embracing tariff and non-tariff barriers, services, intellectual property, and government procurement and tools capable of fostering technological cooperation.

“The Mercosur-Korea deal currently under negotiation already includes a chapter referred to a raft of these particular items. We need to bring them together by establishing a shared commitment such as a fund with enough resources from both sides for technological R&D initiatives”, concluded the Brazilian political analyst.