Jair Bolsonaro, Brazil’s new President, was inaugurated in late December, promising to free the country from “socialism and political correctness”. Part of Bolsonaro’s agenda is to re-align Brazil’s foreign policy, moving away from developing-nation allies, and closer to the policies of Western leaders, particularly U.S. President Donald Trump. As part of his conservative agenda, he also promised to open foreign markets for Brazil, and to enact reforms geared toward reducing the country’s budgetary deficit.
However, his plans could endanger previously laid trade talks.
During a recent visit to Brazil, Portuguese President, Marcelo Rebelo de Sousa, discussed the signing of a trade deal between the EU and Mercosur – the South American trading bloc consisting of Argentina, Brazil, Paraguay, and Uruguay, established by the Treaty of Asunción in 1991, and the Protocol of Ouro Preto in 1994. While Venezuela was also formally a member of Mercosur, the country was suspended from the bloc in 2016 and is, therefore, not involved in current negotiations with the EU over the interregional trade deal
EU-Mercosur trade talks have gone through several starts and stops since the deal was first tabled in 1999. EU firms already export quite a lot to this region, comprising Mercosur’s biggest trading partner – equivalent to a whopping € 42 billion in goods in 2016, and € 22 billion in services in 2015. Both regions also mutually invest in each other. Currently, trade happens under the inter-regional Framework Cooperation Agreement, but a new trade agreement would remove barriers to EU exporters and investors, making the market more attractive to smaller European firms as well. The deal would also strengthen labour rights, and increase environmental protections, together with safeguarding European food and drink products from imitations.
Trade talks were re-launched in 2016, in a bid to finally close the accord, with negotiations covering issues ranging from tariffs, intellectual property, barriers to trade, sanitary measures, sustainable development, rules of origin, and more.
Though negotiations have made progress, there remain key gaps, in areas like determining how far to open each other’s markets to imports of cars and farm products – specific examples include Latin American beef, and EU dairy products. From an EU perspective, it is expected for the agreement to also regulate maritime issues, access to public tenders, and protection of food and drink names such as “champagne”, which the EU considers should only be used for products made in particular areas. Using these names to identify products not originating from these areas, would be considered an unlawful imitation.
Despite the lack of a final breakthrough, Portugal has attempted to facilitate the agreement between the two blocs, which it considers of strategic importance in boosting interregional economic relations. “We also talked about the European Union / Mercosur relationship, and the importance of closing this agreement, which has been complex, but Portugal is always doing its best to close this agreement, it is very important for both parties.” De Sousa told reporters. “Pragmatism obliges us to bear in mind what is useful, to see beyond bilateral relations, also multilateral instruments of agreement that, even without ideological content, and without a doctrinal barrier, can facilitate exports, trade, economic, and financial circulation.”
Nonetheless, Bolsonaro’s support for the agreement is tepid, given both how long negotiations have taken, and his particular interest in the establishment of bilateral negotiations. Threats to the trade deal, which has been some twenty years in the making, were present from multiple axis. At the end of 2018, French Premier, Macron, threatened not to sign the aforementioned trade deal if Brazil pulled out of the Paris climate pact. “I am not in favour of signing major trade accords with powers who have announced that they won’t respect the Paris agreement,” Macron stated.
Moreover, Brazil has already pulled out of another deal: the Global Compact for Safe, Orderly and Regular Migration, also called the U.N. migration pact. Fulfilling his campaign promise to do so, Bolsanaro defended exiting the pact writing, “Defence of national sovereignty was one of our campaign’s banners, and it will be a priority of our government. The Brazilians and immigrants who live here will be safer under rules that we ourselves make, without external pressure.”
An op-ed from Brazil’s new Minister of Foreign Affairs, Ernesto Araujo, also indicates Brazil’s willingness to walk away from previous agreements. It reads that, “We want, of course, to expand trade. Brazilian trade policy, as part of our foreign policy, has slumbered for too long. We are determined to negotiate trade, investment, and technology deals with all our partners, in an ambitious and creative way, exploring different models with different partners, always with the concrete needs of the productive sector in mind.”
“Brazilian foreign policy can change, and the world can change. We don’t have to take them as we found them.”During his visit, the two premiers also discussed the Community of Portuguese Language Countries, which includes multiple economic and social ties between the two countries. “When we talk about community, we talk about issues arising from mobility between the two countries, and the equivalence of diplomas and professional certification,” said de Sousa.
Officially, there are approximately 100,000 Brazilians in Portugal, but the actual number is likely significantly higher.
Though he refused to comment on the nature of the speeches Bolsonaro gave, de Sousa affirmed that his reception in Brazil was very warm, calling it a “meeting between brothers“. Bolsonaro is planning a visit to Portugal in late 2019, or at the beginning of 2020.
Some hope for this long-awaited deal to come in the form of regional allies. Warm talks between Argentina and Brazil resulted in Argentinian premier, Mauricio Macri, and Brazil’s Bolsonaro, signing a commitment to work on the “revision of the common external tariff”, on “improving markets” and “advancing in trade facilitation”. They also agreed to “promote the promising negotiations in progress and support the start of new negotiations with other partners”. This language seems to indicate that Brazil is more likely to invite additional parties into Mercosur, rather than quitting the organization – or the trade talks – altogether.