A Free trade agreement between the EU and Mercosur, the South American regional organisation is under preparation, but agricultural issues still remain as one of the major obstacles, Kinga Brudzi?ska told EURACTIV Poland in an exclusive interview.
Kinga Brudzi?ska is an analyst at the Polish Institute of International Affairs. She holds degrees from the University of Warsaw (PhD) and the University of Economics in Cracow (MA). She also has a Diploma in Latin American Studies from TEC Monterrey in Mexico, and is author of the various analyses of the EU, Middle East, North Africa and Latin America. She spoke to EURACTIV Poland’s Krzysztof Kokoszczy?ski.
In recent months, several EU politicians visited Brazil to facilitate negotiations of the Free trade agreement (FTA) between the EU and Mercosur, the South American regional organization [its members include Argentina, Brazil, Paraguay, Uruguay and Venezuela]. Yet the negotiations started 15 years ago. Why is it taking so long? What challenges do both sides still need to face?
Indeed, the negotiating process is taking a lot of time. Still, some progress has been made recently: the Mercosur countries have begun to work on a joint negotiation position. It would allow them to begin the negotiations process in earnest. Despite the delays – the position was supposed to be ready in December 2013 – it suggests that Mercosur wants to bring the whole process to a successful conclusion.
Yet agricultural issues still remain one of the major obstacles. EU member states are anxious to give access to their markets to agricultural products from South America, such as beef, sugar, milk, and cereals. They are afraid that an expected increase in imports will hurt domestic producers
On the other side of the Atlantic, the Mercosur countries are blocking any progress on opening the auto industry and public procurements to the EU, as long as there is no progress on the agricultural front, leading to an impasse. Furthermore, a traditional way of dealing with economic difficulties in Latin American countries is protectionism – which creates more problems in opening the South American Market to the EU.
Why then the last year’s decision to quicken the negotiations has been made?
There have been a few reasons. First of all, the EU is negotiating a free trade agreement with the US (TTIP), similar negotiations with Canada (CETA) have already been concluded and EU-Canadian FTA is ready and waiting for the ratifications by the national parliaments of Canada and EU member states. Some of the American countries are also trying to sign an FTA with countries in the Pacific region. All these agreements create significant pressure on Mercosur to get an FTA of its own, to help its member states’ trade. Especially given that since Mercosur’s inception in 1991, it has managed to sign only three FTAs: with Egypt, Israel, and Palestine. Hardly an impressive achievement.
Moreover, in recent years, Brazil has developed to such a level that it can no longer use the Generalised Scheme of Preferences in trade with the EU. It creates additional motivation for (the country) to look for further ways to make trade with Europe easier.
Why then Brazil will not try to sign a bilateral agreement with the EU instead, without the hassle of trying to find a common position with the whole of Mercosur? Brazil has already been named a ‘strategic partner’ of the EU, so the EU should not be reluctant to deepen the bilateral relationship.
Brazil should be able to get a free trade agreement with the EU by itself. It is not something officially mentioned there, at least currently, due to Brazil’s commitments to the other countries in the region. Yet, informally people are talking about this idea.
But a separate deal between the EU and Brazil would have to overcome one very serious obstacle. Mercosur members agreed about 15 years ago on joint trade negotiations with third countries. Without exceptions.
Still, Brazil can hope for changes of this rule in a close future. Both Paraguay and Uruguay, seeing the benefits bilateral trade deals have brought to other countries in the continent, are pushing for liberalizing of Mercosur’s position.
Another solution would be creating a “Mercosur of different speeds”. It would allow different member states to negotiate the FTA with the EU in their own time or not at all. Already a precedent exists: the EU – Andean Community agreement (Bolivia and Ecuador quit the negotiations, while Columbia and Peru signed the agreement in 2012.)
Brazil creates two thirds of the GDP of the whole of Mercosur. It is the largest and most populous country in the organization, and can hope for a separate FTA with the EU. Why does Brazil need Mercosur then?
Prestige is the main reason. Mercosur and the twin project of Unasur are two projects on which Brazil had begun to really focus during Lula da Silva’s administration. They aim at improving the status of Brazil and proving that her dedication to regional integration, and thus to the stability of the whole continent. This goal is too important to the current government to abandon.
So Brazil dominates Mercosur?
Yes, her position is definitely the strongest of all member states. There are voices claiming that Brazil uses Mercosur to realize its political goals, yet the situation is not so extreme. Other member states are strong enough that Brazil has to take their opinions into account.
How will the EU – Mercosur negotiations be influenced by the Brazilian general elections [to elect the President, state governors and state legislatures] in October?
They will not really be influenced. This topic has not been present in the electoral campaign. Foreign policy in general has been moved into background after [former President] Lula da Silva has finished his second term. He was very active in this area, but the current president, Dilma Rousseff, is more focused on internal and regional matters. And so foreign relations disappear, so to speak, from public consciousness.
Speaking of foreign relations, the relationship with the EU is not at the top of the most important international ties of Brazil. People are focusing the most on relations within the region, then there are ties with the BRICS countries… the EU is much further down the line. Traditionally, relations with the US have also been important, but now Brazil is experiencing problems similar to those of Germany. It has been discovered that the US was eavesdropping on President Rousseff, and major businessmen.
Do you think that the elections can change something in Brazil? The country has been torn by riots and huge demonstrations since last year.
Indeed, demonstrations this large have not been seen in Brazil since early 1990s. Whoever wins in October, they will have to take into consideration the demands of the protesters and improve the quality of public services.
The riots themselves are a result of the lack of a national idea among the ruling class. At the beginning of the 21st century, Brazil had been reaping the benefits of the Cardoso (Lula da Silva’s predecessor) reforms, continued to some degree by Lula da Silva. Yet, it was Lula da Silva’s term in the office that really had seen the fruits of the earlier reforms – including lifting 40 million people out of poverty. These fruits have allowed Lula da Silva to secure the re-election, and then Rousseff to win.
But now the reforms’ effects have been internalised and are no longer felt by society. People want more. For example, despite low unemployment, at about 5% level, people are complaining about jobs. Not about a lack of them, but a about a lack of better-paid jobs, jobs that would allow them to be socially mobile, to improve their situation and living standard. Any government that will be created after the elections will have to ensure conditions are in place for such jobs to appear.