Mercosur-EU Agreement could impact Brazilian economy by US$ 79 billion

The trade agreement between the Southern Common Market (Mercosur) and the European Union (EU), concluded at the end of June, is expected to impact the Brazilian economy by US$ 79 billion by 2035. The estimate, reports “Agência Brasil” is from the Confederation National Trade in Goods, Services and Tourism (CNC), which released last Friday (11) a study on the issue, during the 2nd Mercosur International Trade and Services Conference (CI19), held at the entity's headquarters, in Rio de Janeiro.

Considering the reduction of non-tariff barriers, the impact could reach US$ 112 billion in the period, according to the CNC. The numbers are slightly below those released by the Brazilian government, of US$ 87.5 billion and US$ 125 billion including non-tariff barriers over 15 years. The president of the CNC, José Roberto Tadros, explained that Brazil currently occupies the pro tempore (temporarily) presidency of the Mercosur Chambers of Commerce Council (CCCM), and, therefore, places itself in the position of leading debates on the agreement.

Exchange ratio

“The foreign market is trade, so we are part of this context. Not only in terms of exchanges but also with regard to tourism and services, so this is the place to deal with these issues and international relations”, he noted. CNC economist Fábio Bentes, one of those responsible for the study, explains that the amount was calculated by adding the trade balance balance, estimated at US$ 66 billion, with the aggregate investment, of US$ 13 billion, plus US$ 33 billion due to the reduction barriers such as phytosanitary, to reach US$ 112 billion.

“We considered Brazil's growth expected for the coming years, at around 2%, 2.5%, and Europe's growth, which is a little lower, at 1.2%, but given the size of the continent's economy, this it also helps to enhance the positive impact of the agreement. Another premise is the exchange rate, between R$ 3.80 and R$ 4 until 2024, according to the Central Bank's Focus Bulletin, and then readjusted for inflation”, he argued.

For him, the agreement is historic and will benefit exporters, importers and consumers. “From the point of view of our exports, the tendency is to benefit the agro-export sector. Brazil is the second largest exporter of agricultural products to Europe and will overtake the United States in a matter of two or three years. From the point of view of imports, we, in commerce and services, if we have access to quality products without high tariff barriers, we will import goods or services at a lower price and the population will have more competitive prices” explained the economist.

The director of the Argentine Chamber of Commerce and Services, Carlos Arecco, highlighted the importance of opening Europe to Mercosur countries. “A market like Europe, where a quarter of the world's Gross Domestic Product (GDP) is at stake, is a tremendously important thing. We have to work and get the fine print right in the agreements that the Mercosur and European Union governments signed, [they] had 20 years to close this agreement. Now, it's up to us to take this forward. Today, commerce and services are practically 70%, 80% of business in the world”, he highlighted.

Also present at the conference, Lebanon's Minister of State for Foreign Trade, Hassan Mourat, explained that his country also hopes to be able to join this agreement with Europe, as has already been done by other Arab countries, in addition to strengthening trade and friendship with Brazil, a country that, according to him, is home to around 12 million people of Lebanese and Arab origin.

“Lebanon is doing everything it can to become a free zone so that it can transport all the goods that come from Latin America, serving as a warehouse for other countries such as China and the Middle East. On the other hand, [it intends] to reinforce this friendship between Brazil and Lebanon and also commercial and tourist relations”, he stated. The Mercosur-EU agreement still needs to be ratified by each of the 32 countries that make up the two blocs to come into force. Negotiations began in 1999.

 
Source: DATA
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