At Mercosur summit, Bolsonaro argues for quick anti-inflation efforts

President Jair Bolsonaro today (Dec. 17), argued for a quick fight against inflation, including efforts with international scope. In Brazil, the National Broad Consumer Price Index (IPCA), which gauges the country’s official inflation, stood at 0.95 percent in November, and is up 9.26 percent year to date and 10.74 percent year on year—the sharpest surge since November 2003.

In Bolsonaro’s view, inflationary forces come as a result of “international constraints and internal restrictive measures brought about by the pandemic and an offer shortage facing the global economy.”

The president further said that fighting inflation is a task requiring a number of tools in political economy that must be completed as quickly as possible. “We need to protect the capacity for consumption, especially in lower-income section, the hardest-hit by the pandemic,” he said during the 59th Summit of Heads of State of Mercosur, a block made up of Argentina, Brazil, Paraguay, and Uruguay, plus associated nations.

Friday’s meeting marked the end of the pro tempore presidency of Brazil, which held the reins of the bloc in the second half of 2021, the year in which the bloc turned 30 years old. In the first half-year of 2022, the presidency will be occupied by Paraguay.

Common tariff

Also during the online assembly, President Bolsonaro regretted the fact that talks on the revision of the Common External Tariff (CET) failed to move forward. According to the Economy Minister, Mercosur’s average CET stands at around 13 percent, compared to the four and five percent averages observed elsewhere in the world. In the Brazilian government’s view, slashing the tariff is crucial to modernizing Mercosur.

CET works as a standardized import tax among Mercosur member countries, charged on goods from outside the block. Its goal is to boost competitiveness among the signatory nations by preventing a product from entering a country with a lower tax than if it were shipped to another member country without the tariff.

“We still believe that this reduction would benefit our private sectors as well as our citizens. The matter, therefore, will still be among the priorities on our agenda,” he said.

During the summit meeting on Friday, Mercosur presidents approved declarations on post-pandemic recovery, digital integration, and cooperation in security and defense.

In 2021, from the beginning of the year through November, Brazil exported approximately $15.3 billion to Mercosur countries and imported some $15.5 billion. In 2020, Brazil exported around $12.4 billion and imported $11.9 billion to bloc partners, with a surplus of around $422 million.