The Mercosur/European Union agreement

Image: Agência Brasil/ Photo by Ricardo Stuckert / PR.
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By MARCOS AURÉLIO DA SILVA*

The agreement is strongly rejected by the working classes, left-wing intellectuals and nationalist opposition to neoliberalism in the Southern Cone countries.

The Mercosur/European Union agreement, whose negotiations began in 1999 but whose conclusions were only announced on December 6, 2024 in Montevideo, at a meeting of Mercosur and European Union leaders, is suffering strong rejection from the working classes, left-wing intellectuals and the nationalist opposition to neoliberalism in the Southern Cone countries.

A Cordinator of Centrales Sindicales del Cone Sur (CCSCS), in a press conference on December 11, 2024, announced its rejection of the agreement not only because it has left workers out of the discussions over all these years, but also because it is an agreement that has more the character of a free trade agreement than of integration of peoples.

For its part, in Argentina, Peronism, the opposition to the Javier Milei government and with a majority in the Chamber of Deputies and the Senate, and historically a defender, in line with Latin American populism, of industrial protection policies and a bloc between workers and the ruling classes with a nationalist profile, made harsh criticisms of the “anti-Peronist” clause negotiated by the Brazilian government, according to which, once the conditions of the agreement in the European Union have been accepted, if one of the countries in the South American bloc accepts it, the agreement can already come into force in that country, without the need for ratification by the others.

In Brazil, the Workers' Party is divided, with the hegemonic sectors defending the agreement and the left sending it strong criticism.

Economist Paulo Nogueira Batista Jr., IMF executive director for Brazil and ten other countries between 2007 and 2015, and vice president of the BRICS Novo Banco between 2015 and 2017, has been one of the main critics of the agreement among Brazilian intellectuals. It is worth summarizing for the reader the main points of his criticism, presented in magazines and news portals of the Brazilian alternative press.

We are dealing with an author with patriotic positions, there is no doubt, but he is not for that reason surrendered to the anti-globalization wave that now dominates today's politics, even affecting sectors of the left. For Batista Jr., the agreement should be rejected because its essence is fundamentally neoliberal, but in no way does this equate to a break with the European Union or even a distancing between it and Mercosur, which can continue to have “strong” and even “deeper” ties.[1]

For the Brazilian intellectual, the neoliberal essence of the agreement manifests itself in several ways.[2] On the one hand, the agreement establishes great losses for the industrial sector of Mercosur, the majority of whose companies will continue to be subject to protection lasting 15 years, a period from which they will be exposed to unhindered competition with European industries, whose innovation systems – or the structural competitiveness that François Chesnais spoke of[3] − are much superior to those in force in Mercosur, as technological superiority, larger scale of production and access to credit under more advantageous conditions remind us.

And even the damage reductions obtained by Brazilian negotiators at the last minute are not very encouraging, such as the postponement of the reduction to almost zero of the import tax on electrified cars, which will have to wait 18 years, and on hydrogen vehicles and new technologies, whose tariff reduction will be extended from 25 to 30 years.

As far as gains are concerned, few or even no gains are within reach of the Mercosur industrial sector, since European tariffs on industrial imports are very low, given the tariffs practiced in the World Trade Organization (WTO) and the preferential regimes, an important part of European innovation systems.

To make matters worse, the government procurement mechanism, a historical instrument of development and industrialization policies in countries with late-stage capitalism, currently without any restrictions on its use in Brazil, is limited to purchases from the health sector, family farming and small businesses. Even so, this is an insufficient concession, as the opposition of the Landless Workers' Movement (MST) has concluded.

Exports of commodities, which are largely dominant in the Southern Cone's export agenda, cannot even be considered major winners. The export quotas offered for some agricultural products, such as beef, sugar and rice, are small and insufficient, or even ineffective, and concern products in which European competitiveness would be unlikely to open up space for Mercosur production, such as meat. These quotas are maintained by the European Union as a way of responding to opposition from farmers in France, Poland, Belgium and Ireland, who have been joined more recently by the movement Slow Food Italian. It’s “green protectionism,” insists Batista Jr.

Still with regard to commodities, the permission for the Brazilian government to impose export taxes up to a limit of 25% on a small list of critical minerals, those essential for the digital economy and energy, represented a major setback, since the government currently does not know of any exceptions for taxing products of this nature.

Finally, it is unlikely that Foreign Direct Investment (FDI) will be stimulated by the agreement, since the general reduction in tariffs makes it more attractive to supply the Southern Cone market from European sources. In fact, if we recall the research conducted by François Chesnais,[4] It is easy to conclude that the form taken by the valorization of capital since the 1980s, embodied by the so-called new-style multinationals, makes it somewhat pointless to talk about FDI. In fact, today the internationalization of multinationals is much more based on the “intangible assets of the company”, which thus bases its competitiveness “on the definition of a Know-how and in R&D”, giving rise to different forms of network companies that do not necessarily require FDI.

Batista Jr.'s criticism, however, is not limited to the analysis of the possible economic results of the agreement. It also addresses the political issues surrounding it. This is where his reflection reaches deeper into the determinations of the class structures that underlie political decisions, but it is also where its main limitations lie. It is an analysis on two spatial planes, two historical blocks, to recall an enlightening category of Antonio Gramsci.

References to the European commitment to signing an agreement whose foundations, basically inspired by the FTAA, are of a neoliberal nature, are read as an expression of the European Union’s “neocolonialism” and “imperialism”, a thesis that clearly errs on the side of excessive economicism. There is no doubt that the mechanisms of unequal exchange inherent in agreements of this nature are part of the imperialist dynamic, as Vladimir Lenin already knew. But it was Lenin himself who avoided reducing imperialism to a purely economic definition, noting that imperialism also has a political and military dimension, necessarily implying “the monopolized possession of territories of an entirely shared globe”.[5]

In fact, if we recall the studies of Domenico Losurdo,[6] This is an error of assessment that, by referring everything to GDP and statistics, ends up losing sight of a more comprehensive dimension of the problem, strictly speaking leaving aside “history, politics, ideology”, and this has somewhat disconcerting practical consequences. After all, reduced to the conditions of unequal exchange inherent in unbalanced economic relations, a country like Brazil, simply because of its economic weight in Latin America, could be considered imperialist.

Furthermore, and retaining the historical meaning referred to above, the structure of imperialism is today essentially altered, no longer corresponding exactly to that of which Vladimir Lenin spoke at the beginning of the 20th century, since the balance of forces “is unbalanced in favor of the United States” both on the “military” and “ideological” planes, and perhaps even more so on the latter than on the former, which is why, as Domenico Losurdo reminds us, important sectors of the Latin American left, such as the Cuban communists (and even the former FARC), reject putting the US and the European Union on the same plane.[7]

Of course, talking about a change in the structure of imperialism does not mean that Europe cannot pursue an imperialist policy and even support neo-colonialist ideologies. The impact of a recent phrase by Josep Borrell, the European Union's representative for foreign affairs, according to which “Europe is a 'garden' and the rest of the world 'mostly a jungle'”,[8] is clearly neocolonialist and even racist. In any case, the fact remains that the war campaigns in which Europe is involved today are basically campaigns coordinated by NATO and thus in the pay of American “planetary imperialism,” as the current war in Ukraine demonstrates.

Another dimension of the excessively economistic reading of the international scenario is reflected in the somewhat optimistic assessment that, in recent times, “neoliberalism has been abandoned” “almost everywhere, including in the United States and Europe”.[9] If we look closely, the range of protectionist policies launched by different governments of the Euro-Atlantic bloc that is being referred to, and whose culmination was the election of Donald Trump, more than an overcoming of neoliberalism, seems to refer to a warning made by Fredric Jameson about the political ideology of advanced capitalism – or what he preferred to call postmodern.

For the North American Marxist, what has been called “populism” since the crisis of the 1970s – and which has nothing to do with classic Latin American populism – is nothing more than a “semantic readjustment” to a reference that has long “disappeared”, namely, “the coalition in a Popular Front of workers, peasants and petty bourgeoisie”.[10] There is no doubt that, in the absence of this reference, it is hardly credible that the anti-social policies of neoliberalism could disappear, even if policies to defend the productive apparatus reappear here and there.

When the discussion reaches what we call the historical bloc of the Southern Cone, Batista Jr.’s criticism becomes quite incisive. He focuses on the internal class determinations that explain the enthusiastic adherence to an agreement that was clearly unfavorable. In particular, the limits of the Brazilian ruling classes are widely exposed. Entities focused on defending industrial interests, such as the CNI (National Confederation of Industry) and the powerful Fiesp (Federation of Industries of the State of São Paulo), after “decades of deindustrialization” are “industrial in name only”, strictly speaking, sheltering leaders who for the most part “are not industrial entrepreneurs”, but merely bureaucrats, or representatives of “importers and assemblers”, interested in the “removal of trade barriers”.[11]

Alongside this group, imbued with the same liberalizing ideology, are the technicians from the Ministry of Development and Industry and career diplomats. To return to Antonio Gramsci, the material structure and the superstructure, the economy and the spirit of the historical bloc, are organically intertwined.

But here there is something that Paulo Batista Jr.’s analysis does not say, or at least leaves between the lines, limiting the strength of his criticism. And perhaps this is why the devastating denunciation of the adherence to neoliberal principles by the negotiating team and the agreement’s enthusiasts outside the government appears alongside conclusions that speak of an “error” or even a “fundamental mistake.”[12] It seems to us that at the very moment when the analysis of the structural determinations of class, or correlation of forces − to use an expression that refers more directly to the struggles for hegemony −, should draw its fundamental conclusion, it is interrupted.

Strictly speaking, the Brazilian government's decision to conclude an agreement of this nature, the decisive steps for which were taken by the neoliberal governments of Mauricio Macri in Argentina and Jair Bolsonaro in Brazil, can be explained by the fact that the victory against the far-right Bolsonaro supporters in the 2022 elections occurred through a political front whose extremely broad reach included sectors with historically neoliberal positions. Just think of the name of Lula's vice president, Geraldo Alckmin, who is also his Minister of Development and Industry, recently affiliated with the Brazilian Socialist Party (PSB) but a member of the Brazilian Social Democracy Party (PSDB) for more than three decades, which was at the forefront of supporting neoliberalism in Brazil before the PT governments and even engaged in the marches to overthrow Dilma Rousseff.

In short, we are faced with the composition of a prominent intellectual leader of the agrarian bloc of the so-called “Brazilian agribusiness”, which also includes the importers and assemblers mentioned by Batista Jr. A historical bloc with a reactionary political profile and whose spatial reach is not limited to the state of São Paulo (where Geraldo Alckmin was governor for more than a decade), but also reaches the entire South and Center-West of Brazil, in addition to the interests it supports in the Mercosur countries, where it has spatially shifted its investments in recent decades.

However, anyone who knows a little about the history of the struggles against fascism at the beginning of the 20th century knows that this is not the only path available to democratic forces. It is enough to remember the political-social composition thought up by Antonio Gramsci in The Southern Question, strictly put into practice in the fight partisan which laid the foundations for Mussolini's defeat in Italy during World War II, but also that designed under the guidance of Vladimir Lenin by Karl Radek for the struggles in Germany occupied by the Treaty of Versailles after World War I.[13]

History certainly does not move in circles, and many of the current conditions of the left in the Southern Cone, and especially of the Brazilian left, cannot be directly associated with those of Europe in the first half of the 20th century. Even so, we must not forget that Brazil, despite the divisions within Lula’s party – or perhaps because of these divisions – is one of the few countries in the world to have a mass party like the Workers’ Party, and thus in a position to reorganize a specific form of those Popular Fronts that Fredric Jameson claimed had been replaced by the “masked” forms of neopopulism in the current stage of advanced capitalism.

As is typical of history, we would not be faced with a path devoid of contradictions, but it would certainly be a much less tortuous and threatening way of overcoming the extreme right, neoliberalism, and even of building a modern-day alternative to capitalism.

* Marcos Aurélio da Silva is a full professor at the Department of Geosciences at the Federal University of Santa Catarina (UFSC).

Originally published in the Italian magazine Out of the Series.

Notes


[1] Batista Jr, PN “Brazil does not fit in Europe’s backyard”. Available in stock here.

[2] We summarize here Batista Jr.’s reading in the articles “The Mercosur/European Union economic agreement”, and “The Mercosur/European Union agreement – ​​a post mortem”.

[3] Chesnais, F. The globalization of capital. Trans. Silvana F. Foa. New York: Oxford University Press, 1996, p. 118-119.

[4] Id. Ib., p. 76-78.

[5]Lenin, VI  Imperialism, the highest stage of capitalism. 4th ed. New York: Routledge, 1987, pp. 87-88.

[6] Losurdo, d. Imperialism and the European question. La Scuola di Pitagora, Napoli, 2019, p. 102.

[7] ID Ib., pp. 85-86 and 116.

[8] Baptist Jr., PN Brazil does not fit in Europe's backyard. See all here.

[9]  Baptist Jr., PN “The Mercosur/European Union agreement – ​​a post mortem”.

[10] Jameson, F. Postmodernism. The cultural logic of advanced capitalism. Trans. Martín Glikson, 2012.

[11] Baptist Jr., PN “The Mercosur/European Union agreement – ​​a post mortem”.

[12] ID Ib.

[13] Regarding the political line followed by Karl Radek in Germany in the 1920s, but also, to a lesser extent, that of Clara Zetkin, one can read the interesting study by Azzarà, GS Comunisti, fascist e questione nazionale. Germania 1923: Rossobruno front or war of egemoni? Mimesis, Milan-Udine, 2018.


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