Brazil does not fit in Europe's garden

Image: Mark Neal


The European Commission continues to fight for a neoliberal and neocolonial agreement with Mercosur

For Helena, first-born granddaughter, who gave rise to the title of this article

The reader who follows me a little will not be surprised by the title of this article, a variant of the title of my most recent book, Brazil doesn't fit in anyone's backyard. If it doesn't fit in anyone's backyard, how could it fit in Europe's garden? When the first edition of the book was released, in 2019, Helena, my oldest granddaughter, who was eight years old at the time, said that the book was called “Brazil doesn’t fit in anyone’s “garden””. Helena shot what she saw and shot what she didn't see. Today, the important thing is to remember that Brazil does not specifically fit into the garden of Europe.

Why “Garden of Europe”? And why say that Brazil doesn't fit there? Let's go in parts, as Jack the Ripper would do.

Mr. Josep Borrell, who is nothing less than “the high representative of the European Union for foreign affairs”, declared that Europe is a “garden” and the rest of the world “mostly a jungle”. The meaning of this type of statement is, as we know, to argue that Europeans need to protect their “garden”, that is, their ultra-comfortable and privileged society, from the harassment of foreigners of various origins, notably immigrants from Africa and of the Middle East, on the one hand, and the imperialism of expansionist Russia, on the other. It is doubtful that immigrants are harmful to Europe and that Russia is, in fact, expansionist. But this is how the majority of Europeans currently think, even if not all of them are as frank as Josep Borrell.

Well then. See the contradiction. Europeans, so jealous of their space and sovereignty, give themselves the right to remain imperialists when dealing with developing countries with little awareness of their national interests. The European Commission continues to fight for a neoliberal and neocolonial type agreement with Mercosur. As a large part of the Brazilian leadership can fit into anyone's backyard (or garden), until now, even in the current government, we have not had the clarity and courage to abandon this problematic negotiation, to say the least.

There is an apparent paradox here. If the Mercosur/European Union agreement is really so favorable to the European side, how can we explain that a significant part of Europeans are staunchly opposed to this agreement? I try to explain synthetically.

One of the central features of the agreement with the European Union, and hence its neocolonial character, is to help perpetuate a classic international division of labor, which reserves to developed nations, such as Europeans, the production and export of industrial goods and to developing nations development, like South American countries, the role of exporters of agricultural and mineral products. The agreement opens Mercosur's industrial goods markets to the free entry of products from the European Union – an unequal competition given the superiority of German and other corporations.

The concessions made to us, although limited, benefit, above all, Mercosur's agricultural exports. However, due to resistance from countries such as France, Poland, Belgium and Ireland, whose farmers fear free competition with South Americans, the agreement maintains a protectionist regime in agriculture, based on quotas for products. Within this regime, the agreement provides little additional access for Mercosur.

It is not surprising, therefore, that Germany is very favorable to the agreement, which increases the foreign market for its industrial corporations. Not even if France and other countries prove very resistant. The meager concessions made to Mercosur in terms of additional access for its agricultural exports have a concentrated impact on countries whose agriculture cannot face competition from Brazil and Argentina in this area head on. Even limited, the concessions we obtained are seen as dangerous by these countries.

Vive la France, therefore. Essentially thanks to her, this unequal agreement may not be concluded. French President Emmanuel Macron will soon be on an official visit to Brazil, from March 26th to 28th. We will welcome you warmly, please! Since Mercosur negotiators are unable to defend national interests adequately, let us at least count on the French to stop something that does not suit us.

Can we count on President Lula? I hope I'm wrong, but it seems not. On the occasion of the visit to Brazil of the President of Spain, Pedro Sánchez, another supporter of the agreement, Lula disappointed. Look what he said: “”We are still going to sign this agreement for the good of Mercosur and for the good of the European Union. The European Union needs this agreement. Brazil needs this agreement. It is no longer a question of wanting or not wanting, of liking or not liking. We need to make this agreement politically, economically and geographically, we need to send a signal to the world that we want to move forward. That’s why I’m optimistic.”

Quite frankly! That’s not why we made the “L”. For the reasons mentioned above, but also for several others that I have already explained in previous articles, the agreement does not serve us and, worse, it seriously harms us. I highlight the following additional problems.

(i) Environmental conditions introduced by Europeans, a form of “green protectionism”, further restrict access to the European market. It goes so far as to claim that the limited concessions made to our agricultural products can be suspended or withdrawn if the environmental clauses are disrespected by us.

(ii) The agreement does not provide effective additional access to European markets for our industrial products. Tariffs on industrial imports are already very low in the European Union; Resetting them wouldn't make much of a difference. And, in any case, our industries very rarely prove to be competitive with European ones.

(iii) Mercosur's tariff opening affects not only industry, but also family farming, which will have difficulty competing without barriers with European products. (iv) The agreement prohibits export taxes, with a few exceptions that Brazilian negotiators would be trying to secure. This is an economic policy instrument that we can use freely today and that would be restricted if the agreement is concluded.

(v) The agreement forces the opening of government purchases to European producers, in many cases more competitive than ours. The current government would have been able to soften this problematic aspect of the agreement, but it is not known whether it has resolved the issue entirely.

I make a reservation. Negotiations have been conducted since 2023 without transparency. We do not know exactly what Mercosur managed to change in the terrible agreement negotiated by Jair Bolsonaro and Mauricio Macri in 2019. It should be noted, however, that the Lula government limited itself to controlling damage, proposing specific adjustments to the agreement inherited from the previous government.

The burning question, I repeat, is this: What do we gain from this agreement? Will our exports increase with the agreement? We already know that this is not the case, as European concessions have been limited in the agricultural area in which we are competitive. Will foreign investment increase here? The agreement will make little or no difference in this area. A possible positive effect on investments from an “improvement in confidence” is, as always, mere conjecture. The agreement may even reduce European investments in Mercosur. Why produce here, if they can supply our market freely from their territory?

It is therefore difficult to understand the government's insistence on concluding this negotiation. One possible explanation is that rapprochement with Europe is considered politically important. If this is true, there is a fundamental mistake. Approximation, yes. Subordination, no. Wasn't the international integration of the Brazilian economy supposed to be sovereign?

Furthermore, it must be clear that abandoning this agreement does not in any way mean breaking with the European Union or distancing oneself from it. Europe will continue to be one of the main economic and political partners of Brazil and Mercosur. Relations with them will remain strong and may even be deepened, regardless of unequal agreements of this type.

*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) []

Extended version of article published in the journal Capital letter, on March 22, 2024

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