Panel SA: Europe sees a tight window for Lula to negotiate an agreement with Mercosur

European Union delegates want to take advantage of Lula’s inauguration to accelerate the agreement with Mercosur. The Europeans’ haste was also registered at the last meeting with Cebri (Brazilian Center for International Relations), which took place at the end of November. According to reports, they want to take advantage of the window of just over a year for the terms of the agreement to be sealed. One of the reasons is the attempt to diversify raw material and fuel suppliers from Russia.

The European delegation stated that, however, there is a very tight window for advancing a possible agreement with the bloc. Although Lula’s arrival in power collaborates positively, the election of the European Parliament -scheduled for 2024- may, on the other hand, put the agreement in the drawer once again.

The pro-Mercosur European disposition at this moment gained urgency as a result of the War in Ukraine. The idea is to change the supply chain. Mercosur emerges as a more viable alternative.

Among the various items currently supplied by Russia, the Latin American bloc could offer wheat, meat and energy —attracting, in addition, investments for gas exploration, for example—another source imported from the Russians.

Lula’s political alignment with the president of Argentina is another factor that could boost. Argentines are the ones who most benefit from Mercosur, according to analysts. With the economy in crisis, the internal tariff for exports and imports in the bloc serves as protection for local producers.

In the opposite direction, Uruguay is trying to detach itself from the bloc and close a bilateral agreement with China, which would buy the vast majority of products exported by Uruguayans – meat, wine, milk, among other items. For analysts who participated in the discussions, the ideal would be for Brazil to sign an agreement with Uruguay to acquire these products, as a way of preserving Mercosur and advancing with Europe.

The national business community, particularly industrialists linked to Fiesp, and neighboring countries are waiting for the conclusion to boost exports to countries in Europe where they currently do not have entry.

Julio Wiziack (interim) with Paulo Ricardo Martins and Diego Felix