Brazil hands over Mercosur presidency to Paraguay

Brazilian President Jair Bolsonaro said today (Dec. 5) that the level of taxation on imports impacts the competitiveness and should be revised by Mercosur. Late this Thursday morning, Bolsonaro opened the 55th summit of heads of state of Mercosur and associated states, in Bento Gonçalves, in Vale do Vinhedos, Rio Grande do Sul state.

He mentioned the free trade deals inked this year by the bloc with the European Union (EU) and the European Free Trade Association (EFTA), underscoring they must be implemented expeditiously, adding that “the reforms invigorating Mercosur should be advanced, with no ideological setbacks accepted.” In his view, the renewal of Mercosur is key to boosting the integration of the global flow of commerce and investment.

“Another decisive factor for our participation in the global economy is the level of taxes imposed on imports. Excessive taxation affects competitiveness and can harm producers. Brazil has confidence in commercial openness as a tool for development and as a result it insists on the need to reduce or revise the common external tariff,” Bolsonaro argued. During Brazil’s pro tempore presidency of Mercosur, efforts were made at technical level to revise and modernize the tariff.

The Brazilian leader went on to announce that, “despite the difficult fiscal situation assailing Brazil,” the country will pay $2.84 million to the Structural Convergence Fund of Mercosur (Focem), and said he hopes to settle the situation with the fund in the near future. Brazil is the biggest contributor, as it brings it 70 percent of the resources in the fund.

Paraguayan presidency

The Vale dos Vinhedos summit marks the end of Brazil’s pro tempore presidency of Mercosur, which will now be led by Paraguay for the next six months. Paraguayan President Mario Abdo Benítez reiterated the country’s commitment to the strengthening of, and the respect for, democratic values and human rights, and said that differences in origin, vision, and ideology “should serve to enrich the regional debate in search of a more just and egalitarian society.”

“We’ll continue to boost integration, taking into account the challenges of today’s world. […] Among the priority topics is boosting the digital agenda, and e-trade, bolstering tools to favor local commerce to make it more inclusive, with an emphasis on micro, small, and medium-sized businesses, as well as the economic empowerment of women and young people,” the president of Paraguay declared.

Benítez further talked about the importance of “reaching true complementary production, seizing the opportunities provided by Mercosur’s realities and potential, continuing to develop value chains, especially in non-traditional sectors.” As an example, he mentioned the car sector and advocated the inclusion of trade and tariff rules of Mercosur.

Among the pacts signed are deals on mutual protection of geographical indication within Mercosur and the reciprocal recognition of digital signatures.

Mercosur member countries combined account for the world’s fifth biggest economy. Since the bloc’s foundation, its commercial exchange grew nearly ten times, from $4.5 billion in 1991 to $44.9 billion in 2018.