Brazil speeds up talks before handing over Mercosur’s presidency

The Brazilian government is working hard behind the scenes to finalize important negotiations for Mercosur before handing over the bloc’s rotating presidency to Paraguay on December 7. In addition to concluding the trade agreement with the European Union, the goal is to take advantage of the Summit of Heads of State in Rio to sign the free trade agreement with Singapore and make Bolivia’s accession official.

The last two topics are practically complete. The signing of the agreement with Singapore is already on the summit agenda. The agreement, the first with a Southeast Asian country, will allow for the expansion of trade and investment flows between the parties.

Bolivia’s accession was approved Tuesday by the Brazilian Senate and now only depends on the approval of the Bolivian Parliament to be announced during the event in Rio. Bolivia will become Mercosur’s sixth member, alongside Brazil, Argentina, Uruguay, Paraguay, and Venezuela—which is suspended due to “disruption of the democratic order.”

The most eagerly awaited of the announcements, the free trade agreement with the EU has seen positive progress in recent weeks. European negotiators who are in Brazil have held meetings in Brasília and a new round will take place in Rio. “It will be 10 days of intense mobilization in the technical area and in the highest political spheres,” said a Brazilian diplomat.

The trade agreement with the European Free Trade Association (EFTA, formed by Switzerland, Norway, Iceland, and Liechtenstein) was also expected to be finalized. Due to the concentration of efforts on negotiations with the EU, the signing may be postponed and take place under the presidency of Paraguay, which takes over the bloc during the summit.

Discussions on other free trade agreements are also planned, but the identity of possible partners is still being kept under wraps.

With regard to the bloc’s internal issues, during the meeting Brazil is expected to present the settlement of most of its debts to Mercosur bodies, in particular the payment of more than $90 million to the Structural Convergence Fund for Mercosur (FOCEM), a joint financing mechanism for member countries that aims to reduce asymmetries.

During the Bolsonaro administration, Brazil accumulated debts with various international organizations. In the specific case of Mercosur, the diplomatic assessment is that the defaults were driven by the “implication and sectarianism” of the previous federal administration in relation to the bloc.

Javier Milei’s victory in Argentina has prompted President Lula to intensify his efforts to conclude the agreement with the European Union during Brazil’s Mercosur presidency and before the Argentine takes office on December 10. The latest moves by the elected government in the neighboring country, however, have calmed tempers.

During a visit to Brazil at the weekend, the likely Argentine foreign minister, Diana Mondino, gave assurances that her country is interested in the agreement and will not stand in the way of the process. “The new Argentine government supports this effort and we are now working intensively with the Spanish president of the European Union,” said the Foreign Affairs Ministry source.

European questions regarding environmental issues, which had been holding up the conclusion of the agreement, have made significant progress. Still on the agenda are discussions about the criteria that will be adopted to comply with the European anti-deforestation law, which prohibits the import, from the end of 2024, of commodities from recently cleared areas.

On the South American side, there are still pending issues regarding the format of government purchases, flexibility in the timetable for local manufacture of electric cars and the export of rare metals, which are abundant in the region and strategic for the manufacture of batteries that power electric cars.

Source: Valor Econômico

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