Government Rules Out European Union-Mercosur Trade Deal This Year

06/26/2014 - 09h09

The government has thrown in the towel, and no longer expects to close a deal between Mercosur and the European Union.

Seeking to create a free trade area between both blocks had been President Dilma's main trade policy objective.

According to presidential advisers, the chances of pulling off an agreement were dashed due to resistance to the negotiations from European countries, together with the proximity of the Brazilian elections and the change in European Union leadership.

According to Dilma's team, after pressuring Mercosur to close an agreement, the European Union pulled back and is no longer displaying the same enthusiasm.

A few months ago, technical experts taking part in the negotiations on behalf of Mercosur had alerted that if proposals had not been exchanged by the beginning of the World Cup, the talks would have to resume in 2015.

Negotiations over creating a free trade area between Mercosur and the European Union have been dragging on since the nineties.

The exchange of proposals, when each party offers to eliminate tariffs for a determined list of products, was due to take place in December 2013.

However, at the request of the Europeans, it was postponed until the beginning of 2014.

The government expected the negotiations would develop between January and March. Then it thought that the proposal exchange could take place before June.

But it subsequently became clear that Europe was not interested in continuing the talks.

The government has been frustrated by this new failure to launch an agreement.

President Dilma was personally committed to the negotiations. She believed an agreement could be a great achievement in an electoral year.

Brazil's foreign trade is experiencing difficulties. For the second year running, the country has run a deficit in the first months of the year.

Brazil was counting on the trade agreement with the European Union to improve its position internationally and please the industry sector.

Faced with the deterioration of the Argentine market, the first destination for Brazil's manufactured goods, the sector which had for a long time resisted the proposal, became an adamant defender of a free trade area.

The European Union's announced change of leadership in October was a determining factor in a lack of commitment on both sides.

"It is hard to negotiate with someone who is leaving in three months. They can use the same rationale. We believe Dilma will win but we cannot blame the Europeans for thinking that way," said one of the advisers discreetly.

Translated by MILLI LEGRAIN

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