Is the agreement with the European Union dead?

Image: Giallo.


Because the Mercosur/European Union agreement is neocolonial, it is anachronistic, out of step with contemporary trends and an outdated style of agreement, whose basic format dates back to the end of the last century.

France tenaciously resists the Mercosur/European Union agreement, as is public and well known. President Emmanuel Macron himself has reiterated that France is opposed to this agreement. Are we to conclude that he is dead and buried? Maybe not. I'll explain why I'm still uneasy.

There are powerful forces on both sides of the Atlantic that insist on concluding the negotiation. On the European side, mainly Germany and the European Commission. On our side, Argentina and, it seems, Brazil. It may sound strange that the Brazilian government is in the same boat as Javier Milei's Argentina. Unfortunately, that's what appears to be happening. Brazilian and Argentine negotiators show signs that they remain determined to close an agreement that is intrinsically unfavorable to us. It is possible, however, that the leadership of the Lula government will become more critical of this negotiation.

Since last year, I have argued that there were abundant reasons to abandon it. I will not repeat all the arguments. I refer you to the recent article, which I published in November [see here]. I just remember that the agreement opens Mercosur markets to free competition, without import tariffs, with industrial firms and other companies in the European Union. The main losers are industry and Brazilian family farming.

And that is exactly why Germany continues to fight for the agreement. Your industries, the main beneficiaries, are eager to gain full access to our markets. They are apprehensive about France's position, which fears competition from the Mercosur agro-export sector. It should be noted that the additional access that our agricultural producers gain from the agreement is small, but its effects are concentrated in some countries, notably France.

How can it be explained that the Brazilian government persists in seeking the agreement? From what I could gather, the reasons for the insistence are essentially in the field of international politics. There are three such arguments.

Firstly, the government seems convinced, for now, that it is advantageous to close a major agreement with Europe. Perhaps it is preparing to proclaim that a negotiation that had been dragging on for more than 20 years has now been concluded because of the government's negotiating capacity. The economic aspects would remain in the background.

From a strategic point of view, moreover, it would make sense to move closer to Europe to reduce dependence on China. The Chinese market has been the main destination for our exports for some years now, partly because we do not face significant barriers to the entry of our primary products there. The European market would supposedly help to diversify our exports.

Thirdly, the fear is raised that Javier Milei's Argentina, frustrated with the eventual failure to close a liberal-type agreement, would decide to leave Mercosur to negotiate individually with the European Union. The agreement with Europe would thus be a condition sine qua non for the survival of Mercosur.

All three arguments are weak, in my opinion. If not, let's see. What sense does it make, firstly, to celebrate the conclusion of an agreement that has been stuck for twenty years or more? It wasn't stuck by chance. The reason is that the Europeans have always offered little and we, until now, saw no advantage in accepting an unbalanced agreement. No special negotiating skills are required to close an agreement on these bases. Anyone concludes a negotiation by essentially delivering on the other party's demands.

It is not clear, secondly, how an agreement that gives us little additional access to European markets could serve as a counterpoint to dependence on China. To achieve this, the agreement would need to bring possibilities to increase Mercosur exports. Now, because of protectionist concerns in Europe, this is exactly what the agreement does not provide us.

Thirdly, Argentina's exit from Mercosur is unlikely. The economic ties created within the bloc are strong, especially with Brazil. It is no coincidence that Javier Milei abandoned his campaign bravado in relation to Mercosur. And even if Javier Milei tried, Congress would probably not approve the departure.

The neoliberal bureaucrats and diplomats who keep waving these geopolitical arguments should calm down. The partial concessions they obtained from the Europeans in 2023 do not change the essence of a neocolonial type agreement. And yet, reader, the truth is that this mentality is something that does not disappear overnight, neither on the side of the colonizers nor on the side of the colonized.

Precisely because it is neocolonial, the Mercosur/European Union agreement is anachronistic, out of step with contemporary trends. It is an outdated style of agreement, whose basic format dates back to the end of the last century, a time when it was thought that broad-ranging economic agreements should guide countries' international relations.

The USA, for example, proposed the Free Trade Area of ​​the Americas, the FTAA, and faced with the failure of this initiative, it signed bilateral FTAA-style agreements with several Latin American countries. They also closed the Trans-Pacific Partnership with several countries in Asia and the Americas. However, this Partnership was emptied after the US withdrew from it. What the European Union is trying to do is come up with an agreement like this belatedly, taking advantage of Mercosur's weaknesses. That the Javier Milei government submits to this is not surprising at all. But the Lula government?

This type of agreement goes against current trends in another central aspect: it causes deindustrialization in developing countries that bend to them. Now, all countries that have deindustrialized in recent decades, starting with the USA and the Europeans themselves, are now actively seeking reindustrialization. China, everyone realizes, ended up becoming “the factory of the world” and, largely because of this, it became the most dynamic power.

Brazil, which, since the 1980s, has also undergone a process of deindustrialization should follow the example of these countries. The manufacturing industry is, in fact, a strategic sector – not only for economic development, but also, a less noticed point, for national security.

National security depends on the existence of an industrial sector in the national territory capable of producing modern weapons. And, from a development point of view, industry is a sector capable of generating quality jobs and technological progress. Countries that renounce industry end up underdeveloped and disarmed.

It is very positive, therefore, that the Lula government, with support from BNDES, has recently launched a new industrial policy. This is a worthy initiative that breaks with decades of omission in this field. But what is the point of supporting the industry, on the one hand, and subjecting it, on the other, to unequal competition with foreign companies?

One should not lose sight, moreover, that the agreement with the European Union is one of several of the same style negotiated during the Paulo Guedes period. Bolsonaro's minister left them ready or almost ready. One of them, the Mercosur/Singapore agreement, was signed in December. There are others on the shelf – with Canada, with the European Free Trade Association and with South Korea. If there is no change of direction, Brazil will soon be entangled in a web of neoliberal agreements.

From his political grave, Paulo Guedes will celebrate.

*Paulo Nogueira Batista Jr. is an economist. He was vice-president of the New Development Bank, established by the BRICS. Author, among other books, of Brazil doesn't fit in anyone's backyard (LeYa).

Expanded version of article published in Carta Capital magazine, on February 8, 2024.

the earth is round exists thanks to our readers and supporters.
Help us keep this idea going.

See this link for all articles


  • João Cândido and the Revolt of the Whipwhip revolt 23/06/2024 By PETRÔNIO DOMINGUES: In the current context, in which there is so much discussion about State reparations for the black population, the name of João Cândido cannot be forgotten
  • Fear and HopeJoao_Carlos_Salles 24/06/2024 By JOÃO CARLOS SALLES: Against the destruction of the public university
  • The collapse of Zionismfree palestine 80 23/06/2024 By ILAN PAPPÉ: Whether people welcome the idea or fear it, Israel's collapse has become predictable. This possibility should inform the long-term conversation about the future of the region
  • Franz Kafka, libertarian spiritFranz Kafka, libertarian spirit 13/06/2024 By MICHAEL LÖWY: Notes on the occasion of the centenary of the death of the Czech writer
  • A look at the 2024 federal strikelula haddad 20/06/2024 By IAEL DE SOUZA: A few months into government, Lula's electoral fraud was proven, accompanied by his “faithful henchman”, the Minister of Finance, Fernando Haddad
  • Return to the path of hopelate afternoon 21/06/2024 By JUAREZ GUIMARÃES & MARILANE TEIXEIRA: Five initiatives that can allow the Brazilian left and center-left to resume dialogue with the majority hope of Brazilians
  • The society of dead historyclassroom similar to the one in usp history 16/06/2024 By ANTONIO SIMPLICIO DE ALMEIDA NETO: The subject of history was inserted into a generic area called Applied Human and Social Sciences and, finally, disappeared into the curricular drain
  • About artificial ignoranceEugenio Bucci 15/06/2024 By EUGÊNIO BUCCI: Today, ignorance is not an uninhabited house, devoid of ideas, but a building full of disjointed nonsense, a goo of heavy density that occupies every space
  • Theological manual of neoliberal neo-PentecostalismJesus saves 22/06/2024 By LEONARDO SACRAMENTO: Theology has become coaching or encouraging disputes between workers in the world of work
  • Chico Buarque, 80 years oldchico 19/06/2024 By ROGÉRIO RUFINO DE OLIVEIRA: The class struggle, universal, is particularized in the refinement of constructive intention, in the tone of proletarian proparoxytones