Brazil believes Mercosur-EU agreement and OECD membership will be reached before 2025

RIO DE JANEIRO, BRAZIL – The Brazilian Minister of Economy, Paulo Guedes, believes that both Brazil’s accession to the Organization for Economic Cooperation and Development (OECD) and the free trade agreement between the European Union (EU) and Mercosur will be achieved “in two and a half years” since the current geopolitical situation and the war in Ukraine accelerate these processes and cause this country to be seen “as a solution” in terms of energy supply and agri-food products.

In an interview with EFE, Guedes analyzed how Brazil is advancing faster than other countries to become a member of the OECD, with initiatives such as the one announced two weeks ago on the progressive reduction of the Financial Transaction Tax on foreign currency, a measure required to join this organization and which means that it will be eliminated in 2028 for all operations of this type.

The Brazilian economy “has recovered faster than the rest of the world in the face of the coronavirus crisis” – GDP fell by 3.88% in 2020, “much less than in other regions and countries,” and rose by 4.62% in 2021 – maintaining an expansive monetary policy, creating almost three million new jobs in 2021 and fostering the digital economy and entrepreneurship “with a law on startups that has allowed more than a hundred unicorns to exist” (companies valued at more than US$1 billion).

On his trip to Spain and France this week, he met on Monday with OECD Secretary-General Mathias Cormann in Paris to discuss his government’s efforts in the process of joining the organization, understanding that it will contribute positively to the economic and regulatory modernization process set in motion to improve “taxation, finance, and foreign investment.”

In January, the OECD formalized the invitation for Brazil to join the organization, and the country is in an advanced stage of “convergence, having adhered to 104 of the 251 regulatory instruments of the organization”. This process “usually takes about five years,” but in the current scenario, “it will be two and a half years,” he said.

According to his estimates, after 2024, Brazil will be the only country in the world to be part of the G20 that belongs to the OECD and is an emerging BRIC economy (Brazil, Russia, India, and China).

Guedes recalled that Brazil has faced soaring inflation, hyperinflation, currency volatility, and a global pandemic in recent decades, but with its own peculiarities and without forgetting the fight against tropical diseases, which means that its economy is already “trained” for difficult times like the current one.

He stressed it is the only country in the world that, during the pandemic, was able to complete its structural reforms, “the independence of the central bank, the new fiscal architecture, the entrepreneurship law, the digitalization of jobs and access to social coverage…”, recalled Guedes, who this Thursday is scheduled to meet with his Spanish counterpart, Nadia Calviño.

When asked about the delay in the announced privatization of companies such as the electric company Eletrobras or the Post Office, he pointed out that some of these processes will be completed “this year”.

Regarding the upcoming presidential elections in October and the fact that Luiz Inácio Lula da Silva is leading the polls published about these elections, he considered that some of the former president’s policies might scare international investors, who appreciate the current regulatory security since he announces his willingness to roll back some laws, “but his campaign colleagues have warned him that this is not the right thing to do”.

“In Brazil, institutions and its economy have grown, which should not be rolled back.” And more so, “in a world recovering from the covid, the war arrives, and now the production processes must be reordered”. That is why “Brazil is a place to invest in the coming years, with a liberalized economy and the capacity to receive investment and offer energy and food security”.

With information from EFE

For the full picture, see our Mercosur EU Trade Deal: Complete Guide.