Mercosur-EU agreement inhibits Brazilian industry, experts warn

For the specialists interviewed by Agência Brasil, the terms of the agreement harm the project of industrialization in Brazil defended by the Lula government and represent more the proposal of broad trade liberalization promoted by the previous government.

The nearly 30 years of negotiations between the two economic blocs were accompanied by the professor of International Relations and Economics at the Federal University of the ABC region of São Paulo (UFABC), Giorgio Romano Schutte. For him, the agreement prevents the neo-industrialization proposed by the new government.

opening of markets

“This agreement means facilitating the opening of markets for advanced industry in Europe, namely Germany, and on the other hand, strengthening Brazil as an agro-exporter of unprocessed products. There is nothing about technology transfer. As if Brazil did not have the right to industrialize itself”, opined Schutte, member of the Observatory of Foreign Policy and International Insertion of Brazil (OPEB).

He believes that the agreement progressed in the Bolsonaro government because the understanding prevailed that the total liberalization of foreign trade was the objective to be pursued.

“So the Europeans want this agreement that was negotiated with the ultraliberals of the Temer government and the Bolsonaro government, but they don’t like Bolsonaro’s image. It would not pass at congresses and would have widespread opposition from public opinion”, analyzed the professor. For him, the Europeans were stalling not to sign the agreement with Bolsonaro, which consolidated a negative image in relation to mechanisms for protecting the environment.

For the associate professor of economics at the State University of Campinas (Unicamp), Pedro Paulo Bastos, the agreement is asymmetrical, favors the European bloc and greatly opens up the service sector and industry in Brazil. “It is not immediate, but (the agreement) has a timetable for the elimination of (customs) tariffs in several branches, or for a sudden reduction in tariffs in almost all branches”, he explained.

Bastos added that, for the Brazilian government, it is fundamental to be able to stimulate new industries that need some degree of protection. “For example, software industry, biotechnology, cutting-edge industries. You cannot import unlimitedly, many people depend on employment in the industry, not least because not everyone can work on a soy farm, which employs very little”, he opined.

Among the points criticized by the government, government procurement stands out, which opens up competition for European companies. “They want the Brazilian government to buy foreign stuff instead of Brazilian stuff. And if they don’t accept Brazil’s position, there is no agreement. We cannot abdicate government purchases, which are the opportunity for small and medium-sized companies to survive in this country”, said President Lula.

CNI supports agreement

Even with these criticisms, the National Confederation of Industry (CNI) supports the agreement. in article published in May of this year, the president of the entity, Robson Braga de Andrade, stated that “it is urgent to move towards the signing of the treaty in its current format, without reopening trade negotiations. This should be a government priority.”

The representative of the CNI affirms that, with the agreement, the tendency is of reduction of the costs of the imported inputs and of the increase of the European demand for Brazilian industrial products.

“Our estimates are that around 40% of all products offered by the European Union in the agreement – ​​and which are subject to some type of tariff at their customs – will immediately cease to be charged import tax upon entering the European bloc” , analyzed.

Professor Schutte believes that CNI’s position is due to the fact that Brazilian industrialists, to a large extent, have given up on the industrialization project. “They no longer believe in an industrialization project. They threw in the towel. They prefer to import the machinery”, evaluated the professor, who considers that President Lula has few allies for the reindustrialization process.

For Unicamp professor Pedro Paulo Bastos, “many stopped being industrial competitors and became assemblers or resellers, at best minor partners” of foreign industries.

Deindustrialization

According to data from the World Bank, Brazil has been undergoing a process of deindustrialization since the 1980s. The weight of industry in the Gross Domestic Product (GDP, sum of all goods and services produced in the country) fell from 34% in 1984 to 10 %, in 2021.