Imagine the scene: on one side of the negotiating table is Brazil, with the other Mercosur countries, desperately seeking new markets to export some of their products: coffee, corn, orange juice, natural honey, airplanes, shoes, wooden furniture, minerals in general.
On the other side, there are the 27 states of the European Union, full of papers with different demands, such as the opening of the market to industries, the possibility of making more foreign direct investments, opportunities for access to natural resources, the opening of new markets to compensate for Donald Trump’s tariffs.
Who has the advantage at the negotiating table? I will spoil the film by telling the end of the story: the agreement between Mercosur and the European Union is important for all parties. The most powerful does not always have the advantage at the negotiating table. In relative terms, the less powerful, because they have fewer demands, are more likely to have most of their demands met.
What about safeguards, a set of measures aimed at protecting certain sectors from tariff preferences? In the case in question, the safeguards are protections that the EU needs for its agricultural sector, which is heavily protected and subsidized. It was a necessary evil, included in the package intended to calm the minds of French farmers. Mercosur itself has had, throughout its history, examples of guarantees among its member countries.
Among the benefits of the agreement for Mercosur, it is estimated that it will have a huge impact on trade, investment flows and a more favorable trade balance. This is expected to lead to growth of 0.46% in Brazilian GDP and 0.20% in the GDP of other Mercosur countries. We have gained in economy, we have lost in autonomy.
In the specific case of Brazil, we are the second largest exporter of agricultural products to the EU, while it is our largest direct foreign investor, with companies in the most diverse sectors. We win in commerce and services, we lose in industry.
The booming green economy should benefit. The EU gains preferred partners for the exploration of natural resources, with an emphasis on rare minerals. Environmental preservation will have allies among Europeans ready to finance initiatives and monitor deforestation.
There is a liberal principle that trade avoids war. Conflicts with business partners can harm business. Brazil and its South American partners also gain geopolitical benefits from the agreement, with a reduced risk of attacks on their sovereignty.
To return to the metaphor of the negotiating table, the European Union’s agendas are longer and more complex than ours. Despite this, the relative advantages of Brazil and the Mercosur partners end up looking greater. If you don’t sign, everyone loses.
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