Brazil sets deadline for Mercosur-EU trade deal

Brazil’s President Luiz Inácio Lula da Silva (in photo) set a deadline of end-2023 to finalize negotiations for a free trade agreement between South America's Mercosur bloc and the European Union.

"I want to make the agreement, I want to have a meeting where the presidents are present to decide and say, ‘Do you want it or not?’ We have been [negotiating] for 22 years. Sometimes I see sections of the press trying to convey the message that it’s Brazil that doesn’t want it, that it’s Argentina that doesn’t want it, that it’s Mercosur that doesn’t want it. No, we want it. We want it, and we need it," Lula told a press conference in India, where he attended the G20 Summit.

"However, we want to be treated on equal terms. A trade agreement is a two-way deal. I buy and I sell. We have to reach a balancing point. And, in my opinion, we have to reach an agreement in the next few months. Either yes or no. Either make an agreement or stop discussing an agreement, because after 22 years no one believes it anymore." 

The deadline Lula set coincides with the end of Brazil holding the rotating presidency of Mercosur, which also includes Paraguay and Uruguay.

One of the key points that is blocking progress is the possibility of EU sanctions against Brazil if deforestation expands. The Brazilian government and local business leaders consider the proposal to be ambiguous and that it could be weaponized by the EU’s agricultural sector to hamper South American exports.

However, Brazil is advancing on mechanisms to show that it is taking ESG practices and the fight against deforestation seriously.

"We are going to develop a carbon credit market in Brazil and with this market sophisticated mechanisms for traceability of production chains will be developed and severe punishments imposed, including for those who practice so-called greenwashing," Cristina Reis, deputy secretary for sustainable economic development at Brazil’s finance ministry, told BNamericas.

Since the beginning of the current administration in January this year, Lula has reinforced his government’s intention to adopt sustainable practices and measures to protect the environment.

However, local business leaders are skeptical about European pressure regarding environmental practices in Brazil.

"My view is that the European agricultural segment does not want this accord because it fears competition from Mercosur's agribusiness," José Augusto de Castro, president of Brazilian foreign trade association AEB, told BNamericas.