[A2k] FT: Brazil reaches out to EU for trade deal

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 12 03:14:04 PDT 2013


http://www.ft.com/intl/cms/s/0/ca912164-0291-11e3-a9e2-00144feab7de.html


August 11, 2013 5:22 pm

Brazil reaches out to EU for trade deal

By John Paul Rathbone and Joe Leahy in São Paulo

Brazil’s rising prosperity has led it to consider pushing for its own trade
deal with the EU, after years of struggling to reach one alongside its
neighbours<http://blogs.ft.com/beyond-brics/2013/03/18/whos-trading-with-argentina-not-brazil/>
.

Latin America’s largest
economy<http://www.ft.com/cms/s/0/5e38b3e4-0267-11e3-a9e2-00144feab7de.html>has
been trying to forge
an EU agreement
<http://www.ft.com/intl/cms/s/0/b6dd7e7a-a075-11e2-a6e1-00144feabdc0.html>since
1999, in conjunction with the four other members of Mercosur, the world’s
fourth biggest trade bloc. The other members are Argentina, Venezuela,
Paraguay and Uruguay.

The move has become urgent for Brazil, however, because it has been
reclassified as an upper-middle-income
country<http://blogs.ft.com/beyond-brics/2013/02/23/brazils-ski-lift-like-ascent/>,
meaning it loses EU trade preferences next year. The only way to regain
them is with a trade deal.

Brazil plans to present a proposal later this month for a Mercosur-EU trade
deal that would allow it to move ahead with its own agreement, Brazilian
foreign minister Antonio Patriota has told the FT.

“There are objective conditions that create strong incentives for an
advance on the EU-Mercosur front,” he said in an interview. But there is
also “anticipation that each [Mercosur] country may be able to negotiate at
separate speeds”.

The deal would cover $80bn of bilateral trade between the EU and Brazil,
whose trade with the EU accounted for 37 per cent of the European bloc’s
total Latin American trade in 2011, according to the European
Commission<http://ec.europa.eu/trade/policy/countries-and-regions/countries/brazil/>
.

World Trade Organization rules allow countries to have different external
tariffs within a trade area. Still, Brazilian officials stress they remain
firmly committed to Mercosur, and pursuing separate trade agendas will only
take place within the group.

A move by Brazil to negotiate apart from Mercosur, which has a combined
gross domestic product of more than $3tn, reflects Brazil’s attempts to
boost its economy after just 0.9 per cent growth last
year<http://blogs.ft.com/beyond-brics/2013/07/22/brazil-to-grow-3-whatever-mantega/>,
as well as a changing global trade landscape.

“It’s good to get on with your neighbours, but the rest of the world is
doing trade deals and Brazil risks getting left out,” said Arminio Fraga of
Gavea Investments, a fund, and the former head of the Brazilian central
bank.

The stalling of the Doha round of multilateral trade talks, which new WTO
chief, Brazil’s Roberto
Azevêdo<http://www.ft.com/intl/cms/s/0/88de6e22-b988-11e2-9a9f-00144feabdc0.html>,
will seek to restart after he takes up the post in September, has led to a
push for bilateral and regional deals. These include a mooted EU-US trade
pact and the US-led 11-country TransPacific Partnership.

Brazil’s Pacific peers, Chile, Peru, Colombia and Mexico, have also formed
the “Pacific Alliance”<http://www.ft.com/intl/cms/s/0/118c2c66-c409-11e2-8c30-00144feab7de.html>,
a trade zone that seeks new sources of growth as the region’s China-fuelled
commodity boom ebbs.

“Breaking off from Mercosur would make commercial sense for Brazil.
Given Argentina’s
hidden protectionism<http://www.ft.com/intl/cms/s/0/b75fc996-ebb4-11e1-9356-00144feab49a.html>,
any trade partner [such as the EU] knows a deal with Mercosur wouldn’t be
worth the paper it’s written on,” said Simon Evenett, a trade professor at
St Gallen University in Switzerland.

Signs of a new pragmatism in Brazilian trade diplomacy comes after mass
protests shook the country earlier this
year<http://www.ft.com/intl/cms/s/0/e879d4f2-dd5f-11e2-892b-00144feab7de.html>,
and as it prepares for a state visit by President Dilma Rousseff to
Washington on October 23.



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