Brazil’s agricultural competitiveness is a concern to countries and trade blocs negotiating agreements with Brazil, said ambassador Paulo Estivallet de Mesquita, head of the Economics Department of the Ministry of Foreign Relations (MRE).
He spoke at the 33rd National Conference on Foreign Trade (Enaex), which was organized by the Brazilian Foreign Trade Association (AEB) in Rio de Janeiro.
Mesquita said that this is also the atmosphere surrounding a trade agreement that Brazil and Mercosur are negotiating with the European Union.
“This is one of the big questions as to whether this agreement will actually work out at all. Every time we are working on similar agreements they our prospective partners have concerns about our agriculture.”
On the other hand, Brazil and other Mercosur countries hesitate about opening their economies for manufactured goods from abroad. “They [potential partners] are reluctant to open their markets for our agriculture, and we also have our own concerns about jeopardizing our industry. We shouldn’t subject it to such sudden competition. This is the main drawback to reaching an agreement.”
Waiting on EU
But that does not mean that an EU deal is unfeasible, according to him. “Of course if we manage to close the deal, we’ll face quite a challenge because as a strong partner, the EU is a big competitor for our industry.” However, he went on, this would pave the way for Brazil and Mercosur to seek further agreements with other partners.
In a domestic perspective, there are also important points to consider regarding negotiations with major partners. One of them is about taxation. “The fact that our rates are high relative to other countries may pose a challenge to some businesses when they do set their feet here.”
Mesquita pointed out that a Mercosur resolution requires that all negotiations outside the bloc area be made collectively. According to the ambassador, the same concerns that Brazil has about a separate negotiation apply to the Mercosur as a whole.
“Even if we negotiate without Mercosur, the same issues remain – concerns around our agriculture and our own concerns for our industry.”
And if Brazil closes a trade agreement with a partner that accounts for 25% or 30% of our foreign trade as is the case with the EU, Mesquita believes “it will make sense” to pursue similar agreements with all other partners, including China and the US.