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Mercosur may close deal with more European countries by year’s end

After the European Union, Mercosur may close another deal with European countries by the end of the year, said the Foreign Trade Secretary of the Ministry of Economy, Lucas Ferraz. The South American bloc formed by Brazil, Argentina, Uruguay and Paraguay will have two more rounds of negotiations with EFTA, a group that brings together Switzerland, Iceland, Norway and Liechtenstein, and the federal government is optimistic that the negotiations will be concluded.

“We will sign later this year, with a high degree of certainty,” said Lucas Ferraz, who attended the board meeting of the Brazilian Foreign Trade Association (AEB) in Rio de Janeiro. “It’s an important deal. Despite being small, it’s a region that is probably the highest per capita GDP in Europe. It has more than one and a half times the GDP of Argentina, something like $ 1.1 trillion.”

Mercosur and EFTA are expected to return to trading within 30 days and another round of trading is due to take place by October. By the end of 2021, the secretary is betting on the conclusion of Mercosur trade agreements with Canada, South Korea and Singapore, and by the end of his term, the goal is to approach a deal with two of the world’s largest economies.

“We already have an exploratory dialogue with the United States and Japan. It is something that is on our radar until the end of this government. We are very optimistic that it will be possible to conclude these negotiations by the end of this term,” said Ferraz.

Brexit

The secretary explained that the way the United Kingdom will leave the European Union may mean that Mercosur has to restart negotiations with the British, which have until October 31 to define how the separation, nicknamed Brexit, will occur.

The exit of the bloc was approved in a popular referendum in 2016, and since then the British government has not been able to define how Brexit will take place. Former Prime Minister Theresa May was able to negotiate a deal that held trade advantages for British and Europeans, but the British parliament did not approve the terms. His successor, Boris Johnson, has taken on the willingness to take Brexit forward even without agreement with the EU if he cannot renegotiate the terms.

“If the UK decides to leave the European Union without any agreement, it becomes a country that has no agreement specifically with anyone. It will have to renegotiate all its agreements, and possibly it would have to renegotiate the agreement with Mercosur, “said Lucas Ferraz, who says it is difficult to speculate because all the scenarios are still on the table. “For Brazil, the interesting thing is that we keep the agreement parameters as they are today. So, if we leave the United Kingdom, our idea is that Mercosur will renegotiate a possible new agreement with the United Kingdom in the same parameters that were negotiated with the European continent “.

The agreement between Mercosur and the European Union will eliminate import tariffs for more than 90% of the products traded between the two blocks. The secretary predicts that the discussion on the commercial side of the deal should take a year and a half to be approved by Europeans, which would cause tariffs to begin to be lowered between late 2020 and early 2021.

Mercosur countries will have 15 years to eliminate tariffs under the agreement, while Europeans will do the same in 10 years. Lucas Ferraz believes that a 15-year timeframe will be enough for the sectors of the Brazilian economy to prepare for competition with European products, as well as for the government to implement reforms aimed at reducing the cost of producing in Brazil, such as improving infrastructure. , tax reform and red tape. “We believe that time is a reasonable time.”

The agreement between Mercosur and the European Union should add to the Brazilian economy R $ 1 trillion in exports and imports over the next 15 years, besides a gain of R $ 500 billion in GDP and R $ 450 billion in investments.

Source: Agência Brasil

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08.01.2019

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