The free trade agreement between the European Union and Mercosur, announced on Friday, December 6, in Montevideo, should strengthen the power of the Brazilian agricultural sector, but could be bad and even “predatory” for the national industry. This is the analysis of Gilberto Maringoni, a political scientist and professor of International Relations at the Federal University of the ABC.
“It’s still not clear how a series of points that Brazil—from Lula and Dilma’s first terms in office—was very unhappy and worried about will be dealt with, which is government purchases and predatory action on industry, what barriers will be put in place,” Maringoni told Brasil de Fato after Friday’s announcement.
“Germany is going to increase its exports, especially of cars, putting the industry here in serious trouble. If these cars arrive at a lower price level—due to the productivity of German industry—there is no reason for Brazil to have an automobile industry, to negotiate with China to bring new industries here,” he explains.
Maringoni points out that with the market open, it would be necessary to grant “absurd subsidies” to attract foreign industries to Brazil.
The analyst points out that another important point to be defined is government purchases. In theory, the agreement should mean tax reductions for European companies selling products to the Brazilian government. On Friday, it was announced that purchases made for the Brazilian public healthcare system (called the Sistema Único de Saúde or the SUS) do not fall within the scope of the agreement, meaning that European sellers will not get a discount when they sell to the SUS.
Maringoni recalls that one of the historical obstacles to the agreement, which had been in the works since Brazilian President Fernando Henrique Cardoso’s government in 1999, was regulating these purchases. Jair Bolsonaro’s government even announced an agreement, but the blocs backed down. This 2019 agreement opened up South American borders to government purchases and tenders, without restrictions that would protect the South American bloc’s industries.
One national sector that stands to benefit is agriculture, and this is generating greater opposition from European countries that are strong in the sector, such as France, Poland, Italy and the Netherlands, as well as popular South American and European movements. “Their farmers fear that the greater productivity of Brazilian agriculture in particular, especially in the animal protein sector, will end up imposing predatory action on their products,” says the analyst.
“Hence a series of allegations about the use of pesticides, which are real, but the main issue is competition due to the high productivity of Brazilian agricultural products.”
Industrialization
Maringoni says that the agreement should further inhibit the prospect of reindustrialization for Brazil and Argentina.
Despite the announcement made by the president of the European Commission, Ursula Von der Leyen, the agreement now needs to be ratified by a majority of EU members to be made official. France, the Netherlands, Poland and Italy are against it, with Germany and Spain, among others, in favor.
For the professor, Europe finds itself in the middle of a trade war between the US and China and, with Donald Trump, it will become even more displaced, more distant from its main partner, which “will reduce its investment in the war in Ukraine and weaken the alliance with the European Union.”
In this respect, for the analyst, the agreement would represent a salvation for the European bloc’s industry, especially its richest country, Germany, which is going into recession.
Popular movements denounce the project
European organizations and left-wing activists believe that the project will accelerate deforestation in the Amazon and worsen the climate crisis by increasing greenhouse gas emissions. Greenpeace calls it a “disastrous” text for the environment and La Via Campesina accuses the agreement of violating countries’ sovereignty.
In March, rural struggle movements articulated in La Via Campesina repudiated the agreement in a communiqué, in which they called on Lula to “listen to the cries of the peoples of the countryside, waters and forests and put an end to the ongoing negotiations and make room for the construction of a popular national development project for Brazil.”
“The agreement on the table represents a step backwards for Brazil and the Mercosur countries in terms of socio-economic development, as well as a frontal attack on the sovereignty of our countries,” the statement said. The grassroots movements point out that the agreement “was rejected more than 20 years ago” and the current text, which will be taken up again in 2019, represents “the essence of Bolsonaro’s DNA without any commitment to the development of our country.”
“The agreement takes on neo-colonial characteristics in its conception and threatens, in its terms, our peoples and territories, threatens peasant agriculture, traditional communities and hands over our common goods to the interests of international capital, thus consolidating the agro-export character of our economy, which is basically to continue exporting raw materials to supply the demands of European countries in exchange for industrialized products.”
The deregulation of markets, free trade agreements and, in particular, the negotiation of the free trade agreement between the European Union and Mercosur are the main causes of the serious crisis facing European farmers, according to La Via Campesina.
This article was first published in Portuguese on Brasil de Fato.
