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Brazil: Mercousur must allow member countries to sign trade agreement

Brazil: Mercousur must allow member countries to sign trade agreement

BRASILIA: A top Brazilian minister said that Mercosur must allow member countries to sign trade agreements with third parties and called for the end to the rule which prevents such initiative. Development, Industry and Trade minister Armando Monteiro Neto made the statement during a competitiveness seminar in Rio do Janeiro a couple of days ahead of a crucial meeting in Brussels between Mercosur representatives and the European Union to address an encompassing free trade agreement.

“Brazil made an important construction with Mercosur. It was a long institutional construction and we acknowledge Mercosur as something significant, but Mercosur can’t become an impediment for Brazil to try other forms of insertion in other economic blocks”, underlined Monteiro, who is a former president of the powerful Brazilian Industry National Confederation, CNI.

Monteiro recalled that there is a rule 32/2000, which forces all Mercosur members to negotiate jointly and in consensus all trade agreements and specifically bans any individual initiative.

The strong warning from a leading minister in Dilma Roussesff’s cabinet comes ahead of the European Union and Community of Latin American and Caribbean States heads of state and government summit (28 plus 33 and 61 in total) to be held in Brussels, where taking advantage of such attendance Mercosur and EU delegates will meet to discuss the current round of negotiations and much delayed agreement, which were started back in 1999.

In the past negotiations have gone through several erratic periods, with hopeful resumptions but still far from the original objective. This has been for different reasons: political situations in different countries, global trade negotiations, differences over opening the EU to Mercosur agriculture and lately over Argentina’s reluctance to advance at a quick pace.

Argentina in five months time will be holding presidential and legislative elections and is currently implementing an economic controversial unorthodox approach which privileges the domestic market and industry.

However President Rousseff in her second mandate started last January and which originally sided with Argentina, has now changed radically and explicitly is calling for an end to Decision 32/2000, agreed fifteen years ago and wants a more flexible Mercosur where each member can advance in bilateral agreements with third parties.

Faced with Argentina’s reluctance, Brazil has agreed with Uruguay that Mercosur negotiations with the EU could be developed with a ‘two speeds’ approach respecting Argentina’s timing and allowing other members to keep advancing.

“Brazil somehow can continue to advance even with some of the limitations imposed by Mercosur. Our marriage is ‘indissoluble’ but it’s always important to discuss the relation” insisted Monteiro Neto during the Rio do Janeiro seminar.

The minister also revealed that one of the ‘absolute priorities’ of his ministry is to facilitate trade with the United States, which is the destination of the majority of Brazil’s manufactured goods.

Likewise the former CNI chief said that foreign trade is the way of increasing Brazil companies’ competitiveness, and given the current difficulties faced by the Brazilian economy which only expanded 0.1% last year and could suffer a 1.3% contraction this year, it has become paramount.

”The foreign exchange rate (following the strong devaluation of the Brazilian currency in recent months) is offering us a window of opportunities“.

According to Monteiro Neto Brazil needs, almost desperately, to increase exports and competitiveness overseas to face the huge drop in commodities’ prices in international markets.

”Brazil enjoyed a long period of commodities exports at high prices which created a feeling of comfort. Many believed the country was definitively on track for a prosperity cycle which would go on. But no that cycle is over or is coming to an end, and this needs to be urgently addressed. This means changing our heads, emphasis and policies, and Mercosur has to be included in this new approach”, concluded the minister.