The Competition Safeguard Mechanism (MAC), established in an agreement signed last week, in Buenos Aires, between Brazil and Argentina, to create instruments for the protection of both countries’ industries, disappointed Brazilian entrepreneurs.
In a note to the press, the president of the Brazilian National Industrial Confederation (CNI), Armando Monteiro Neto, said that "the mechanism violates the Mercosur’s spirit of integration and produces a sensation of moving backwards in the bloc’s development."
According to Monteiro Neto, the protocol failed to include various of the productive sector’s recommendations, such as the adoption of a mechanism that would be temporary in character and a commitment not to apply antidumping measures and other unilateral import restrictions.
Brazilian entrepreneurs had also suggested a maximum time interval for the measures to remain in effect, and this, too, was omitted from the protocol.
The CNI’s note says that, despite its opposition to any sort of mechanism to administer trade, the entrepreneurial sector faced up to this issue and presented the Brazilian government with a series of essential conditions, in case adopting the mechanism turned out to be inevitable. According to the CNI, the government accepted the entrepreneurs’ proposals and attempted to include them in the negotiations.
"The CNI will still conduct a more detailed analysis before taking a definitive stance. Nevertheless, without further ado, the organization insists that the Mercosur is an asset to be preserved, not just for its strategic aspect, but, most of all, for its economic component," the note says.
The safeguard mechanism had been proposed by Argentina as early as 2004. Since Brazil was opposed, Argentina decided to act unilaterally against the entry of Brazilian products. This led the two countries to negotiate an alternative, resulting in the MAC.
São Paulo and Rio
The Federation of Industries of the State of São Paulo (FIESP), and the Federation of Industries of Rio de Janeiro (FIRJAN) also issued a note criticizing the safeguard agreement.
The Federations evaluate that the agreement conflicts with free trade concepts, creates an environment of insecurity for the bloc’s economic agents, and represents a backward step on the process of "building" the Mercosur.
In the note, they regret that the agreement did not include items such as a maximum one-year validity for the safeguard (instead of the agreed three years plus one), nor the immediate revocation of the mechanism if trade deviations occur. The Federations believe the agreement may bring severe consequences for Brazilian exports.
The safeguard mechanism had been proposed by Argentina in 2004. The country affirms it needs such a tool to protect its local industry from an "invasion" of Brazilian products.