Public consultations that were launched between October 2010 and January 2011 opened up the opportunity for the business sector to provide comments and input on negotiations for the conclusion of a free trade agreement between MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) and the European Union. In order for the negotiations to move forward, significant efforts are expected to liberalise MERCOSUR's access to the EU agricultural sector and to open up MERCOSUR's industrial sector to the European Union.

The negotiations for the conclusion of the EU-MERCOSUR free trade agreement, initiated in 1995, returned to the public agenda following a stalemate in 2004. The European Union's limited offer of concessions relating to agricultural products and the Brazilian tendency to protect the industrial sector interrupted the free trade talks. In May 2010 the re-launched negotiations were officially announced at the Sixth EU-Latin America and Caribbean Summit Meeting in Madrid.

Secretariat of Foreign Trade (SECEX) Ordinance 48 of October 22 2010 and SECEX Ordinance 54 of November 26 2010 initiated public consultations for the submission of comments and input with respect to the EU proposal of specific origin requirements for products classified under Chapters 1 to 23 and 25 to 97 of the Harmonised Commodity Description and Coding System. The deadlines for submissions ended on December 20 2010 in the case of Ordinance 48 and February 4 2011 in the case of Ordinance 54.

SECEX Ordinance 1 of January 6 2011 initiated a public consultation for the submission of proposals for the improvement of the MERCOSUR offer. The deadline for submitting proposals ended on February 15 2011 and intense consultations between the governments and private sectors of the MERCOSUR countries are anticipated over the next few months.

Following receipt of the submitted proposals, on February 16 2011 a MERCOSUR-EU Coordination Group was set up to examine and recommend the Brazilian position in the negotiating process. Besides the consolidation of the Brazilian position, there must be agreement among the MERCOSUR member countries to put forward a unified proposal.

Bearing in mind that in 2010 Brazilian imports originating in the European Union amounted to approximately $40 billion and Brazilian exports to the European Union totalled $43 billion, it is important that the stakeholder sectors closely observe and participate in the negotiations for consolidation of the Brazilian, MERCOSUR and EU positions. According to information from the Ministry of Development, Industry and Foreign Trade, the estimated trade gain for the two blocs is $6 billion.

The negotiations on the agreement include more than tariff liberalisation; they also include:

  • the protection of intellectual property;
  • the liberalisation of services;
  • the protection of investments;
  • trade remedies;
  • competition policies;
  • phytosanitary barriers; and
  • sustainable development provisions.

It is hoped that the negotiations will lead to a comprehensive trade agreement. This reinforces the importance of businesses monitoring the negotiations and combined actions of the government with the business community.

For further information on this topic please contact Luiz Eduardo Ribeiro Salles or Mariana Lucente Zuquette at BARRETTO FERREIRA KUJAWSKI E BRANCHER – Sociedade de Advogados by telephone (+55 11 3897 0300), fax (+55 11 3897 0330) or email ([email protected] or [email protected]).