The proposed trade agreement between Mercosur and the European Union (EU), which has been under negotiation for decades, is criticized by Brazilian President Luiz Inácio Lula da Silva for potentially harming the Brazilian industry.
Despite pressure from the EU, the Brazilian government has amplified its criticism, with President Lula describing certain agreement aspects as “unacceptable” and a “threat” to Brazil.
Experts suggest that the agreement undermines Brazil’s industrialization plans, championed by President Lula’s administration, and leans more towards the broad trade liberalization agenda of the previous administration led by Jair Bolsonaro.
The agreement aims to facilitate market penetration for advanced European industries, particularly from Germany, while strengthening Brazil’s export of unprocessed agricultural goods.
However, critics argue there is no technological transfer involved.
Giorgio Romano, a professor of International Relations and Economics at the Federal University of ABC São Paulo (UFABC), opines that the agreement seems to deny Brazil’s right to industrialization.
Romano and Pedro Paulo Bastos, a professor of Economics at the State University of Campinas (Unicamp), believe the current agreement is disadvantageous for Brazil, describing it as asymmetric and favoring the European bloc while exposing Brazil’s service and industrial sectors.
While the agreement entails a timeline to eliminate or reduce tariffs across several sectors, the Brazilian government insists on nurturing new industries requiring protection.
Public sector procurement, which opens competition to European firms, is one aspect of the agreement publicly criticized by the Brazilian government.
Despite these concerns, the National Confederation of Industry (CNI) supports the trade agreement.
The CNI representative asserts that the agreement will likely lower the costs of imported supplies and increase European demand for Brazilian industrial products.
World Bank data indicates that Brazil has been undergoing a process of deindustrialization since the 1980s, with the industry’s contribution to the GDP dropping from 34% in 1984 to 10% in 2021.