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Brazil demands flexibility from Mercosur to negotiate bilateral agreements and defends tariff reduction

Posted 2021-05-19

Brazil’s Minister of Economy, Paulo Guedes, asked Mercosur for flexibility so that each member country can negotiate bilateral agreements with other nations and defended the reduction of the common external tariff.

In a session in the Senate for the 30th anniversary of the trade block, made up of Brazil, Argentina, Paraguay and Uruguay, Guedes advocated increasing international integration, according to Agência Brasil.

For Guedes, the negotiation of individual trade agreements by one of the members does not mean rejection of the bloc, so he reiterated his commitment to “move towards modernization and international integration” with flexibility so that each member advances at a “different speed” towards the liberalization of international trade.

 “A great tool that was created as an avenue towards globalization and integration ended up becoming a bubble that isolated us from the great flows of trade and investment,” he lamented.

On the other hand, Brazil’s Minister of Economy pointed out that his country also wants to advance in the reduction of the Common External Tariff (TEC), in which it faces resistance from Argentina.

“We understand the situation of the members that may have difficulties to reduce it at this moment, but for Brazil it is important. We have to show that we are moving in the direction of openness,” he said.

Independent trade negotiations

Another dimension of the review advocated by Brazil is that Mercosur allows member countries to have the option of conducting independent trade negotiations. “We are really convinced of the importance of moving forward and, at times, moving forward is allowing a little different speeds to those who are more prepared, or more willing to make that move. We should have the freedom to have slightly different rhythms ”, said Guedes.

Brazil is interested, for example, in negotiating agreements with countries of the Comprehensive Regional Economic Partnership (RCEP), the largest free trade bloc in the world, which was formed in 2020 and brings together 15 economies in Asia-Pacific – 10 members of the Association of Southeast Asian Nations, plus China, Japan, South Korea, Australia and New Zealand. 

“We think it is important that there is this possibility of negotiation, so that members have the option of finding what is most convenient for their economies”, stressed the minister.

According to Guedes, this flexibility does not exclude “the idea and the dream of integrating the continental economy”, but it does allow a member to make different trade agreements, such as a pioneer. Then, if the results are positive, the group can move forward together in the same direction. “If our idea was to facilitate trade, we would not like our agreement to prevent trade facilitation and integration, which was the initial objective”, he justified.

Focus on integration

The thematic session was requested by the ex-president and now senator Fernando Collor (Pros-AL) and had the participation of the Minister of Foreign Affairs, Carlos Alberto Franco França, and ex-ministers at the time of the Treaty of Asunción – Zélia Cardoso de Mello (Economy, Finance and Planning) and Francisco Rezek (Foreign Affairs). 

Recalling the story of other participants in the creation of Mercosur, Minister Paulo Guedes commented that the bloc was successful in its first ten years, but did not receive the necessary priority in the following governments and stopped pursuing continental and global integration with more emphasis.

In the view of the Minister of Economy, countries such as China, Indonesia, India, South Korea, Malaysia and the Philippines – which have done the opposite and plunged into global trade currents in the last 30 years – have carried out the “greatest poverty reduction program that humanity has already experienced ”, taking 3.7 billion people out of misery in that period.

For Guedes, Brazil could have obtained the same results, with increased competitiveness and reduced poverty, had it also sought integration with global trade. 

“We want to follow those initial paths, started 30 years ago, with this flexibilization movement in Mercosur”, concluded the minister.

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