“No one will dictate anything to anyone,” says Brazilian negotiator on MERCOSUR reform

RIO DE JANEIRO, BRAZIL – Brazil is proposing tariff reductions and flexibility in negotiations with other international partners. Argentina is resistant.

Brazil’s main negotiator in MERCOSUR, Ambassador Pedro Miguel da Costa e Silva, Foreign Ministry Secretary of Bilateral and Regional Negotiations in the Americas, said that there is no interest in forcing a new Common External Tariff (TEC) on Argentina and other bloc members.

According to him, the Brazilian government stands firm in advocating the TEC reform and flexibility to guarantee agreements with other international partners, but the time is to seek convergences for a consensus among the four countries in the bloc.

“No one will dictate anything to anyone. We will negotiate,” said the diplomat.

This diplomatic tone from the Foreign Ministry is different from that used by Economy Minister Paulo Guedes and his team. Since the government’s inception, the economic team has advocated trade openness in Brazil, with or without Argentina. The Foreign Ministry’s position is to negotiate and reach a consensus.

Guedes was said to have been annoyed by a letter of support to Argentina, signed by ex-presidents Fernando Henrique Cardoso and Luiz Inácio Lula da Silva and released late last week. The Minister ordered his staff to prepare a “technically robust and politically forceful” reaction.

Brazil has proposed to the bloc’s partners to reduce the TEC – which is used in trade with non-MERCOSUR countries – by 10% now and another 10% by the end of this year. The proposal is met with resistance from Argentina, which alleges risks of damage and loss of competitiveness for domestic industry.

Behind the scenes, the Argentines agree that Brazil should immediately reduce its import tariffs by 10% in a linear fashion. However, they only accept the 10% cut in 75% of their tariff lines in January next year. The second round of TEC cuts would only be discussed from 2023.

The Brazilian government also intends to remove the restrictions that prevent a MERCOSUR country from negotiating free trade agreements, with reduced import tariff rates, separately from other members.

Currently, this type of treaty is only allowed if all countries agree jointly. Brazil and Uruguay are the main advocates of a more flexible rule.

According to Costa e Silva, Argentina has committed itself to formally present two proposals: one on the reduction of the TEC rates and the other on flexibilization. He said the Argentines had only submitted the documents to be analyzed by the other bloc partners last Thursday.

He said that as soon as this process is completed, a meeting of Foreign Ministers from the four MERCOSUR countries will be scheduled to address these issues.

“At this time, Brazil, Uruguay and Paraguay will comment on Argentina’s proposals, in order to continue a negotiation process in search of consensus and negotiated solutions,” the ambassador said.

Costa e Silva emphasized that the goal is to prevent differences of opinion among the four countries from paralyzing or slowing down MERCOSUR. “We are doing what we have always done throughout MERCOSUR’s history: trying, creatively, to move forward, respecting our differences,” he stated.

Fernando Henrique Cardoso and Lula’s letter is like ‘drowning men clutching at a straw,’ says Guedes’ secretary

In reaction to the letter signed by Fernando Henrique and Lula, Carlos Alexandre Da Costa, the Economy Ministry’s special secretary for Productivity, Employment and Competitiveness, described the ex-presidents’ manifesto as “drowning men clutching at a straw.”

“Lula and FHC, who destroyed companies with the Brazil cost of R$1.5 trillion (US$297.2 million) a year, are drowning men clutching at a straw and protesting against the trade opening we started,” Da Costa said on a social network.

He emphasized that the opening was discussed with Brazil’s productive sector and “chosen at the ballot box,” it will be “gradual, predictable and concurrent to the reduction of the Brazil Cost.” He added that the Bolsonaro government managed to reduce the Brazil Cost by 10% and assured that it will lower import tariffs by 10%. He cited as an example a 25% tariff, which will drop to 22.5%.

“It is the right measure to enhance the competitiveness of our industries and enable the price reduction that consumers expect,” he said.

The secretary said that by the end of the government in 2022, measures will be implemented with the potential to reduce by two-thirds what he called “obstacles” introduced in the economy in 23 years of previous governments – a period spanning the Fernando Henrique Cardoso and Lula eras. “Brazil is growing and they will not be able to stop our prosperity,” he added.

Source: O Globo