Brazil's Ministry for Foreign Affairs Wants Free Reign to Trade Without Mercosur

06/24/2016 - 10h15

Brazil's Ministry for Foreign Affairs has been discussing the possibility of revoking a decision made by Mercosur, Latin America's leading trading bloc, to allow Brazil to negotiate bilateral free trade deals independently of the other members.

In 2000, Mercosur states agreed they would negotiate all trade deals, which include preferential tariffs with third-parties, as a single unit.

Brazil, via Mercosur, has signed just three bilateral free trade deals - with Egypt, Palestine and Israel, with only the latter still in use. The chancellor José Serra maintains that Brazil can work within Mercosur more flexibly in order to close deals.

The widespread perception, however, is that a trade deal with the EU (under discussion since 1999) will not advance because of resistance from Argentina.

Brazil has set its sights on possible bilateral agreements with Canada, Japan, Korea and the EFTA (the European Free Trade Association: Switzerland, Norway, Iceland and Liechtenstein).

Should Brazil wish to revoke Mercosur's decision, it will need the support of all four full member states. Paraguay and Uruguay are firm supporters of the initiative, and have always backed the option to close trade agreements independently.

Argentina is against the idea. But Brazil is hopeful that if it, Uruguay and Paraguay join forces to revoke the decision, Argentina's opposition will become politically unsustainable.

Not all Brazilian's are on board, however. The Ministry of Development and several prominent Brazilian businesses have expressed concerns.

If the decision is revoked other Mercosur member states would have the ability to close bilateral agreements independently. Sectors such as footwear and machinery, some of Argentina's main exports, could lose their market.

Translated by GILLIAN SOPHIE HARRIS

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