Credit, AFP
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- author, Leandro Prazeres
- To roll, From BBC News Brasil in São Paulo
The Brazilian government fears a withdrawal from the European Union a little more than a week before the scheduled date for the signing of the trade agreement between the bloc and Mercosur, scheduled for next Saturday (20/12), in Foz do Iguaçu, during the summit of Mercosur heads of state.
Next week will be decisive for the future of the agreement because it will have to be approved by two votes, one in the European Parliament and the other in the European Council. The vote is expected to take place between Tuesday (16/12) and Thursday (18/12).
Two sources with knowledge of the negotiations told BBC News Brasil that if the Europeans do not sign the deal now, it could mean the end of negotiations on the treaty that has been under discussion for 25 years.
According to one of them, if this happens, the chances of new negotiations between the two blocs are almost zero and Brazil, the largest economy in Mercosur, will intensify its search for trading partners in Asia.
The trade agreement between Mercosur and the European Union began to be discussed in 1999 and provides for the creation of a free trade zone between the two blocs. The idea is that there will be reciprocal reductions in the import and export rates of products between the two regions, thereby increasing trade flows between the two regions.
If finalized and entered into force, the agreement will create one of the largest free trade zones in the world, with an estimated population of 718 million people and a gross domestic product of $22 trillion.
In 2024, the negotiation phase of the agreement was completed, but to start working, the agreement still needs to go through several phases, including signing, expected next week.
For the deal to be signed, it must now be approved by the European Parliament and the European Council, the body that authorizes the European Commission to conclude trade deals.
Last week, BBC News Brasil spoke with European diplomats in Brasilia and they reported that the approval of the agreement by Parliament should not encounter difficulties since it is obtained by a simple majority, that is, half of the deputies plus one.
The problem, according to them, lies in the vote of the European Council.
For the agreement to be approved there, it requires a qualified majority, which means it must have the approval of at least 15 of the 27 member states and that they represent 65% of the bloc’s population. Currently, the population of the European bloc is estimated at 451 million.
Within Mercosur, a bloc formed by Brazil, Paraguay, Uruguay, Argentina and Bolivia, there is consensus for signing the agreement. In Europe, however, there remains resistance to its completion.
Within the bloc, the deal is strongly supported by countries including Germany, Spain, Portugal and the Czech Republic.
The main countries currently opposed to the deal are France and Poland, but signs of opposition are also emerging among countries like Belgium and Austria.
The French say they fear the impact that this agreement could have on the country’s farmers, who would face competition from agricultural products from the South American bloc.
To overcome the resistance of opponents, European negotiators created safeguards for the bloc’s agricultural sector. The safeguards were approved earlier this week by the European Union’s International Trade Committee and provide that Europeans can end tariff benefits granted to Mercosur products in the event of a 5% increase in the volume of such exports compared to the previous year.
The guarantees are also due to be voted on next week by the European Parliament.
The “faithful” in the balance, believe the European diplomats interviewed by BBC News Brasil, should be Italy. The country has around 59 million people and is the third largest population in the European bloc. Calculations by Brazilian and European diplomacy indicate that a refusal from Italy, added to the expected rejection from France and Poland, could bury the chances of approval of the agreement.
If the Italians join the opposition of France and Poland, the three countries together will represent around 36% of the bloc’s population, making approval of the deal unfeasible.
However, on Monday (12/8), an Italian diplomat said, during a meeting with colleagues from the bloc in Brasilia, that the country would support the approval of the agreement, but that the mood, among other things, was one of caution.
Double standards
According to the aide to the Presidency of the Republic heard privately by BBC News Brasil, a European retreat from the agreement would reflect what he described as the “fragility” of the bloc’s leadership.
He stressed that the agreement could strengthen the two blocs commercially, especially in an environment where multilateralism would be attacked by leaders like the American Donald Trump.
Still according to this source, a rejection of the agreement by the Europeans would also show that they would prefer to accept an agreement considered by them as “asymmetrical” with the North Americans rather than signing a free trade agreement more favorable for them with Mercosur.
The mention he made concerned the agreement signed between the United States and the European Union in August, after the imposition of customs duties by the North Americans on European products, in which the trade bloc committed to reducing customs duties on products from the United States and also committed to purchasing oil, natural gas and defense products from the country governed by Donald Trump.
For this member of the Brazilian government, the solution for Brazil and Mercosur in the face of the failure of the agreement with the Europeans would be to seek new partnerships in regions like Asia.
According to Brazilian government data, in 2025, China will have already purchased $94 billion worth of Brazilian products. This amount is more than double the $45 billion purchased by European Union countries.
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