Brazil Free Trade Agreement Countries
At the end of April, Argentina announced to its Mercosur partners, Brazil, Paraguay and Uruguay, that they would withdraw from trade negotiations already concluded with the European Union and the European Free Trade Association. This unilateral decision caused shockwaves on the part of Mercosur, as it implied a possible dissolution of the trading bloc. However, Argentina`s decision was later overturned and Mercosur`s partners are now considering how they can make progress despite each country`s competing priorities. Although Brazil, Uruguay and Paraguay are interested in new trade agreements with other countries such as Canada, South Korea and Singapore, the von Fernandez government has reversed Argentina`s liberal stance and does not support the idea of new trade agreements. The project will then focus on a study on fair and fair trade in Brazil and will hold a second forum in December 2018. Brazil negotiates a free trade agreement with the EU under the Mercosur Group. The U.S. trade surplus with Brazil was $12.0 billion in 2019, an increase of 46.6% ($3.8 billion) over 2018. The EU is negotiating a free trade agreement with Brazil as part of the EU negotiations on the association agreement with Mercosur countries (including Argentina, Uruguay and Paraguay).
Mercosur is formally a customs union. While a free trade agreement implies an obligation between countries to respect lower tariffs and other trade rules that provide preferential market access, a customs union adds a common external tariff on imports into the bloc and a commitment by its four members to negotiate trade agreements with third countries. In theory, this means that each country enjoys preferential access to other members` markets and stronger negotiating power in trade agreements, not unlike the members of the European Union. In practice, intra-community trade is inherent in bureaucracy, non-tariff barriers and agreements on private trade restrictions. Very few external negotiations have been concluded, so Mercosur is the most closed region in the world, with an average tariff of more than 12%. The only comprehensive free trade agreements signed by Mercosur since its inception in 1994 were with Egypt and Israel, and all Mercosur trade agreements cover less than 10% (calculations based on World Bank global development indicators) of global GDP. At the same time, Brazil is negotiating with India and South Africa, with which it is the largest economic bloc of the southern countries within the IBSA, creating tensions within Mercosur. The United States recorded a service surplus of $18 billion with Brazil in 2019, down 11.6% from 2018. Both of these situations would be a disaster for the Argentine economy. One of the cornerstones of industrial production that is still inefficient is the ability to sell to Brazil at zero tariffs, while competitors have to pay for THE ECTs.
If Brazil signs many trade agreements, Argentine companies will be subject to stiff global competition in the Brazilian market, without having the advantage of accessing new markets opened by trade agreements for Brazilian companies.