By MATTHEW MENDES*
The free trade agreement between Mercosur and the European Union is anachronistic and harmful to Brazil and other countries in the South American bloc
1.
Anyone who watches the speech by Ursula von der Leyen, president of the European Commission, celebrating the free trade agreement between Mercosur and the European Union, will be able to see how damaging the treaty is for Brazil and other countries in the South American bloc. In her two-minute speech, she not only rejoiced in her victory, but also explained why she was smiling so broadly: with the agreement, her bloc guaranteed, on the one hand, preferential access to our raw materials and, on the other, expanded markets for its products.
On the other side, the big winner was German industry. The tariffs that Donald Trump has already announced he will impose on European imports do not bode well for European manufacturers, especially German ones. On this side, the agreement favors agribusiness and mining. It is worth remembering that these two sectors employ few people, do not generate innovation, create enormous environmental liabilities and are associated with violence in the countryside against indigenous peoples, quilombolas, traditional communities and family farmers.
Furthermore, there is no need to talk about technology transfer, after all, Europe is no longer a technology hub. Of the eight companies that account for 80% of the cloud computing market, an essential service for Industry 4.0, six are American and two are Chinese.[I] Of the 11 technology companies that are among the 50 largest in market value, six are American, three are in China, one is South Korean and only one is European, and yet it occupies 41st position.[ii]
Of the 50 largest companies developing artificial intelligence (AI), only six are headquartered in the European Union.[iii] When it comes to electronic devices, half of the smartphone market is in the hands of Samsung (South Korea), Apple (United States) and Xiaomi (China) [iv] and more than half of the computers are with Lenovo (China), HP (United States) and Dell (United States).[v]
When it comes to renewable energy industries, the situation is no better for the European Union. Of the ten companies that account for three-quarters of solar panels, China is home to seven, while Canada, South Korea and the United States each have one. When it comes to lithium batteries, 80% of the market is in the hands of six companies: three Chinese, two South Korean and one Japanese. Only in the wind turbine market does the European Union stand out, being home to four of the seven that account for 70% of the market. [vi]
2.
Furthermore, this is an anachronistic agreement. When negotiations began, it was the height of neoliberal globalization. Today, when the parties consider the negotiations to be over, we are witnessing a wave of protectionism. However, the President of the European Commission also spoke of a “crucial moment for our shared future.” Well, it seems like a harbinger of a repeat of our shared past: overexploitation and environmental liabilities here guarantee development, well-being and political stability there.
Specifically in the Brazilian case, the agreement jeopardizes the already difficult reindustrialization.[vii] Since the liberalization experienced in the 1980s and 1990s is part of the explanation for Brazil's early deindustrialization, there is no theoretical or rhetorical juggling capable of sustaining that the liberalization of trade with the European Union will contribute to the recovery or reinvention of national industry.
From food and beverages (products in which certification of origin is a differential) to aircraft, including machinery and equipment, truth be told, our industry is in no position to compete with the European industry. (It is not appropriate here to discuss and compare the history and development strategies; the possibilities and external constraints that generated this disproportion between the productive capacities here and there: the fact is that, at today's prices, our industry is in no position to compete with the European industry, especially with the German industry).
For comparison purposes, our manufacturing industry accounts for 1,05% of the sector worldwide, while Germany's industry accounts for 8,65%, the Netherlands for 3,52%, Italy for 3,43% and France for 3,05%.[viii] Therefore, the agreement tends to result in the reduction of qualified jobs, purchasing power and productive diversity. At the end of the day, the result will be the strengthening of the primary sector.
Despite the risk that Brazilian industry runs, the National Confederation of Industry (CNI) not only seems very satisfied with the agreement, but also sees it as “strategic in the diversification of Brazilian exports” and “important to reverse the process of reprimarization of national exports”, after all, “it will encourage Brazilian industry to export goods with greater added value to a highly competitive market”.[ix]
However, it is inescapable to note that the Brazilian bourgeoisie does not perceive any interest in the autonomous development of the country, much less any intention of transforming it into one of the protagonists of the international political economy, especially since a significant part of the industry installed here is foreign-owned. From a general point of view, this can be seen in the support given to the 2013 demonstrations, the 2016 coup and the government of Jair Bolsonaro. However, if we want a more concrete and current example, we can look at the position of the CNI regarding Bill 2.338, which regulates the use of Artificial Intelligence in Brazil.
One of the reasons given for their opposition to the bill was that it could make Brazil less attractive for the location of data processing centers. These physical units are essential for cloud computing, which, in turn, are of utmost importance for Artificial Intelligence and Industry 4.0 in general. datacenters consume a lot of energy to cool the processors. According to the CNI, one of Brazil's main potentials in the development of Artificial Intelligence is “the clean energy matrix to meet the demand of data centers.
Countries are seeking to decarbonize their production processes by directing production to regions that offer clean, safe, cheap and abundant energy, such as Brazil.” In this sense, says Jefferson Gomes, director of Technology and Innovation at CNI, Bill 2.338 could “scare away new investments, harm artificial intelligence projects in the production sector that do not even use personal data, and cause the country to lose competitiveness and the opportunity to become an important player in global chains.[X]
In other words, our industrialists’ plan is not to develop the digital sector, but to take advantage of our natural potential so that the sharks of digital capitalism can reduce their ecological footprint. The development of the digital sector has fallen far short.
3.
However, the conclusion of negotiations on the agreement does not mean that it will come into effect immediately. The agreement needs to be internalized by the parties. In Brazil and in Mercosur, this stage includes evaluation and approval by local parliaments. In Brazil, considering that the current government, however contradictory it may be, is enthusiastic about the treaty and that the opposition is particularly interested in anything that harms our development, approval of the agreement will have strong support. Finally, it should be noted that mobilization by the social movement, as was done to block the Free Trade Area of the Americas (FTAA), would be urgent, necessary and welcome.
In the case of the European Union, the European Parliament and the Council of the European Union. The Parliament represents European citizens and is proportional to the population of each country. The Council is made up of ministers from the member states. While in the Parliament the vote is by simple majority, in the Council the calculation is more complicated: it needs to be approved by at least 55% of the countries and represent at least 65% of the bloc's population. And this is where the Steinheager gets watered down. The agreement faces greater or lesser resistance from France (15% of the bloc's population), Italy (13%), Poland (9%), the Netherlands (4%), Hungary (2%) and Austria (2%), which together exceeds the demographic threshold.
As you can see, the championship is still being played. However, it must be acknowledged that, for now, Ursula von der Leyen is right: “this agreement is a victory for Europe.”
*Matthew Mendes is a PhD candidate in International Political Economy at UFRJ and Member of the Coordination of the Brazilian Network for the Integration of Peoples (Rebrip).
Notes
[I] MENDES, M. Introductory notes on Industry 4.0. In: Fernando Teixeira. (Org.). Brazilian reindustrialization: challenges and opportunities. 1st ed. Rio de Janeiro: Instituto Equit, 2024.
[ii] MENDES, M. The digital international political economy. Rio de Janeiro: Brazilian Network for the Integration of Peoples, 2024.
[iii] Cai, K. AI 50. Fobes, 11.Apr.2024. Available at: https://www.forbes.com/lists/ai50/. Accessed: 07.Dec.2024.
[iv] CNN Brasil, 14/2024/5. Global smartphone sales increase 3% in QXNUMX, says consultancy. Available at: https://www.cnnbrasil.com.br/economia/macroeconomia/vendas-globais-de-smartphones-aumentam-5-no-3o-tri-diz-consultoria/.
[v] FURUYA, B. Global PC market grows again after two consecutive years of decline, research indicates. Available at: https://olhardigital.com.br/2024/04/10/pro/mercado-global-de-pcs-volta-a-crescer-apos-dois-anos-seguidos-de-queda-indica-pesquisa/.
[vi] MENDES, M. Reindustrialize and integrate. Finde Bulletin, v. 4, p. 53-103, 2023.
[vii] Recently, the Brazilian Network for the Integration of Peoples (Rebip) held a series of seminars on Brazilian reindustrialization. In all of them, there was a panel on the implications of the Mercosur-European Union Agreement for the recovery (reindustrialization) or reinvention of the national industry (neoindustrialization). Some of the speeches were quite illustrative, such as https://youtu.be/Ea__I_7Gysw?si=zDkHMbHdVxlI2kwN e https://youtu.be/dxvRk-W8J9g?si=sPzCzekJYLfSu4wP.
[viii] CNI. Brazilian industry gains two positions in the world ranking of industrial exports. Industry performance in the world. Year 7, n. 1, Nov. 2023.
[ix] CNI. Mercosur-EU Agreement will play a strategic role in the diversification of Brazilian exports. Industry News Agency, 06.Dec.2024. Available at: https://noticias.portaldaindustria.com.br/posicionamentos/acordo-mercosul-ue-tera-papel-estrategico-na-diversificacao-das-exportacoes-brasileiras/.
[X] CNI. Artificial Intelligence Bill harms technology development in Brazil and innovation in the production sector. Industry Portal, 04.jul.2024. Available at: https://imprensa.portaldaindustria.com.br/posicionamentos/pl-da-inteligencia-artificial-prejudica-desenvolvimento-e-uso-da-tecnologia-no-brasil/..
the earth is round there is thanks to our readers and supporters.
Help us keep this idea going.
CONTRIBUTE
