Industry calls for bolstering of Mercosur on bloc’s 30th anniversary

Mercosur’s industrial council also urges expansion of deals

Published in 25/03/2021 - 15:08 By Wellton Máximo - Graça Adjuto / Nira Foster

On the 30th anniversary of Mercosur, the industry in Brazil and the other member countries demanded the strengthening of the bloc. Recommended in a bid to meet this goal are stepping up internal integration, expanding trade deals with strategic countries, and boosting competitiveness and economic stability.

The demands can be found in a joint statement by Mercosur’s Industrial Council, formed by the industrial entities of four member nations, signed Thursday (Mar. 25). The council is made up of the National Confederation of Industry (CNI), the Argentinian Industrial Union (UIA), the Paraguayan Industrial Union (UIP), and the Chamber of Industries of Uruguay (CIU).

Economic stability in the region for the resumption of growth stands at the top of the list of priorities. The second is the ratification of trade deals with the European Union and the European Free Trade Association (EFTA)--comprising Iceland, Liechtenstein, Norway, and Switzerland—as well as the search for new agreements.

The document also calls for a more expeditious execution of internal integration deals, halted in the congresses of Mercosur nations, like contracts on the authorization of public purchases and pacts on the facilitation of trade between bloc members. This measure is expected to bolster free trade, customs union, and the participation of the private sector in Mercosur.

The fourth demand includes measures to lower costs for the industry and raise competitiveness, especially for Brazil and Argentina, the last countries on CNI’s competitiveness ranking. This is believed to be key to having countries attract investment again and expand commerce.

Challenges

To the judgment of the industrial entities, Brazil and the other Mercosur countries are experiencing a period of economic deterioration, a reduction in industrial products, and an increase in commodities on the exports agenda. The statement suggests the implementation of “realistic” macro-economic measures to economically stabilize the region, ruling out goals regarded as “non-viable,” like a unified Mercosur currency or the convergence of macro-economic policies.

Regarding internal integration, CNI, one of the signatories of the document, mentions non-tariff barriers and the delay in internalizing commitments as factors putting off the customs union advocated by Mercosur. In the case of deals on government purchases, authorizing the participation of companies of the four countries in public bidding processes within the bloc, CNI argues that the text is still halted in Congress, even though the commitment was signed in 2017.

On integration with other economic blocs and strategic markets, the industrial sector also argues for effective free-trade deals with the US as well as partnerships with Mexico, Canada, the UK, and Central America. The text further requests the deepening of deals with South America. According to Mercosur’s Industrial Council, choosing new partners should be a transparent process, carried out through public consultations and viability assessments.

As for Brazil, CNI urges the country to do its homework and bring the rule of the Transference Price and Tax Agreements in line with the procedures adopted in most countries. This would reduce the number of taxes on service imports, CNI maintains. Charged when companies of the same group in Brazil and overseas exchange goods, transference prices often result in price manipulation.

Figures

In its 30 years of existence, Mercosur has brought positive results to the country. From 2011 to 2020, Brazil exported $54.9 billion more than it imported from other nations in the group, with a diversified exports agenda, in both industrial goods and foods. In this time span, the commercial surplus is second only to China, to which Brazil exported $158.3 billion more than it imported, but sales to the Asian country are focused on a few products.

According to a CNI survey, each $180 million exported to Mercosur generates $759 million for the Brazilian economy. As for the total sum of salaries, $121 million in labor force is created for every $180 million exported to the other bloc countries, compared to $81.3 million of exports for China.

The regional bloc represents the first or second destination of exports of seven Brazilian states: Amazonas, Ceará, Pernambuco, Mato Grosso do Sul, São Paulo, Paraná, and Rio Grande do Sul.

Translation: Fabrício Ferreira -  Edition: Graça Adjuto / Nira Foster

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