Following its agreement with the EU, Mercosur may strike deals with other European countries. “We will sign it this year, with a high degree of certainty,” said Lucas Ferraz, secretary for Foreign Trade with the Brazilian Ministry of Economy, during a Wednesday (Jul 24) meeting of Brazil’s Foreign Commerce Association, in Rio de Janeiro.
The South American bloc—formed by Brazil, Argentina, Uruguay, and Paraguay—is yet to hold another two rounds of talks with EFTA—comprising Switzerland, Iceland, Norway, and Liechtenstein—and the Brazilian government is optimistic about its chances to bring negotiations to a conclusion.
“It’s an important agreement. Though small, EFTA brings together nations that probably have Europe’s highest per capita GDP. The bloc is equivalent to one Argentina and a half—something near $1.1 trillion,” Ferraz argued.
Mercosur and EFTA are likely to resume talks within 30 days, and another round of talks should be held before October. By the end of 2021, the secretary believes trade accords between Mercosur and Canada, South Korea, and Singapore should be concluded. Another goal is reported to be making strides towards a deal with the world’s two biggest economies.
“We already hold an exploratory talk with the US and Japan. It’s something on our radar until the end of this administration. We’re very optimistic about concluding these negotations by the end of the present administration,” Ferraz noted.
The secretary explained Mercosur may have to restart talks with the British, who have until October 31 to make a decision as to how the separation from the EU (Brexit) will take place.
“If the UK decides to leave the EU without any sort of deal, it becomes a country with no specific agreement with anyone. It’s going to have to renegotiate its deals, and possibly the deal with Mercosur,” Ferraz declared, adding that speculating is difficult, as all scenarios are still on the table.
“Advantageous for Brazil would be retaining the same parameters of the deal as they are today. Therefore, if the UK leaves the EU, our idea is that Mercosur renegotiates a possible agreement with the British on the same terms that were negotiated with the European continent.”
The Mercosur–EU accord will eliminate import tariffs on over 90 percent of goods traded between the two blocs. The Brazilian secretary believes the discussion about the commercial part of the pact should take a year and a half to be approved by the Europeans, which would lead to tariff cuts to start sometime between the end of 2020 and the beginning of 2021.
Mercosur countries will be given 15 years to abolish the tariffs listed in the deal, whereas the Europeans will do the same in ten years. Ferraz argues that this prize will be enough for the sectors of the Brazilian economy to gear up for competition with European nations, and also for the government to implement the reforms directed at slashing production costs in Brazil, which should include efforts like improving infrastructure, cutting red tape, and carrying out a tax overhaul.