Brazil seems determined to break ties with Mercosur to sign, once and for all, a new free trade agreement with the European Union, one that, promoters argue, is up to the importance of its economy.
After the failed attempt to close the agreement in 2004, the Brazilian Government, with support from the local private sector, proposes a reduction of tariffs to be applied faster than its partners and that would include up to 90% of products traded between the country and the EU.
Brazil may have different deadlines for reducing tariffs than neighboring countries like Uruguay, Paraguay and Argentina. Venezuela, which came into Mercosur last year, has no part of this negotiation.
The announcement in February that the European Union and the United States began talks to establish a free trade area made it more apparent that the Brazilian foreign policy was a failure when it came to trade, while other countries are quick to mark territory and to accelerate their trade policies.
But would Brazil truly benefit from a Free Trade Agreement with the EU? It is highly unlikely. It would certainly not benefit the masses. Recent history proves it. None of the the developing or underdeveloped nations that has closed agreements with the United States or the EU have benefited whatsoever.
For example, the block of the Pacific Alliance, formed two years ago with Peru, Chile, Mexico and Colombia, is said to look like a model of successful collaboration on the continent, but once practical matters are analyzed, the opposite is true. This group is said to be more cohesive because it possesses mildly stable economies. However, these nations and many others in Latin America are just a sneeze away from falling into economic depression as they become more and more dependent on the United States and the EU, for obvious reasons. Brazil is not different from its neighbors, as political leaders allowed the train to Development fly by without implementing polices that would allow the country to take advantage of the storm of foreign investment that is now leaving as fast as it came.
Although the GDP of the four Mercosur countries represent a total of $ 2.8 trillion, surpassing that of the Pacific Alliance, instability in Argentina and Cristina Fernandez’ policies raise doubts about the progress of negotiations with Europe.
If anyone abroad wants to learn what do some Brazilian politicians think about the Mercosur, it is enough to read what Senator Aécio Neves has to say: “Mercosur is a prison for us”, he said. Mr. Neves is a virtual opposition candidate for president Rousseff in next year elections.
In 2004, after five years of conversation between the two blocks, Argentina blocked the agreement “due to small issues”, recalls former Minister of Development and Foreign Trade, Luiz Fernando Furlan. “The Europeans wanted access to the car market to sell 50,000 cars in the Mercosur.
Mr. Furlan’s claim is right. However, what he does not say is that Brazil employs the same kind of protectionism that him and Mr. Neves complain about when it comes to cars and dozens of other products. It is enough to ask the average Brazilian who intends to buy a car to learn about the kind bureaucratic hell people go through when attempting to import a car from Argentina, for example.
If negotiations had closed 10 years ago, promoters of trade agreements in Brazil claim that the two blocs would be the largest in the world, and that Brazil would have achieved faster progress in the globalization of its businesses, expanded exports and that domestic reforms would have accelerated. These are the leaders who believe that borderless societies governed by transnational reckless corporations is the best forecast for their fellow citizens. In truth, the result of a free trade agreement with Europe, for example, would do to Brazil what it has done to the United States in the last two decades.
But why do Brazilian leaders believe that a trade agreement with the EU is such a good thing if its economy remains in a deep economic slump? It is true, the EU is formed by 27 countries today, but how many of those 27 nations have the prospect of becoming potential partners as they try to save themselves from economic collapse? Wouldn’t a free trade agreement with China make more sense from the economic viewpoint? How about Russia?
In practice, Brazil has as much leverage to conduct trade negotiations with the EU as any other banana republic in Latin America. More importantly, Brazil conspires against itself when looking for solutions to bargain collectively in negotiations with other partners in the block. “Brazil does not exclude any solution that can facilitate compliance with policies that promote integration,” says Daniel Godinho, Secretary of Foreign Trade of the Ministry of Development. ”
Reality could not be further from the truth. Brazilian politicians have done for many years what is beneficial to the party, and they will continue to do it until Brazilians say ENOUGH.
Uruguayan President, Jose Mujica, showed support for some initiatives promoted by Brazil. “It is wise and foresighted not to depend on a single market,” he said. The need to find alternatives to reach a free trade agreement with Europe is an issue of consensus within and outside the government. “There is more openness from business groups, as it is expected, since all they have to care about is enlarging their profits.
Minister Furlan points out that there is no room for setbacks. “We lost a great opportunity in the past, but now Brazil has to go on, with or without the support of Argentina ,” he says. Godinho, the Ministry of Development, however, argues that the failure in the past can not be attributed to Argentina. “We had a very good deal , but there was no correspondence in the European offer ,” he says.
Mr. Godinho has a point. From January to October this year, the country exported 2.06 % less to the EU, with a total of 40.300 million dollars and imported 42,700, 7.9% more than last year. Thus, Brazil accumulated a deficit of 2,300 million dollars in the balance. That is the first deficit with Europe since 1999.
Representatives of the private sector, however, are confident because the political class is more aware of the need to change positions, they say. “All the candidates for President of Brazil for the next elections speak of close bilateral agreements,” says Roberto Rodrigues, former Minister of Agriculture in the Lula government. Mr. Rodrigues’ statement is the perfect caveat to ask the following question: Why are nations seeking trade agreements that will undoubtedly harm their economies as supposed to closing deals with other nations in what Mr. Rodrigues calls bilateral agreements?
Today, Brazil has agreements of this kind with Israel, Egypt and Palestine. For Senator Neves, the agreement with the European Union is the last hope of salvation for Brazil against isolation. “Otherwise, we will be definitely excluded from global trade chains,” he says. But in a world where massive interconectedness makes countries more likely to get dragged down into piles of debt and economic dependency, why would anyone choose so-called “free trade agreements” over safer more advantageous bilateral trade deals?
In the case of Brazil there are two larger obstacles to development: One is the lack of interest from the political class, which is fond of keeping their privileges and two is THE PEOPLE’s ignorance – often willful – and apathy that run rampant from North to South and East to West.