EU-Mercosur deal: 24 years in the making

In this week’s issue: The most important facts of the week. EU- Mercosur deal in jeopardy? Challenges with public spending.


The week in review

  • Cabinet members. President-elect Jair Bolsonaro announced Santander economist Roberto Campos Neto as the future President of the Central Bank. Following the announcement, the São Paulo Stock Market Index rose by nearly 3%. Also confirmed this week were former Finance Minister Joaquim Levy for the head of the National Development Bank (BNDES), and Ernesto Araújo for the Ministry of Foreign Affairs. An anti-globalist, Trumpist character, Mr. Araújo has been highly critical of China and defends a posture of total alignment with the U.S.
  • U.S.-Brazil relations. Donald Trump’s National Security Adviser John Bolton could visit Brazil on Nov. 28-29, prior to the G-20 Summit in Buenos Aires. Mr. Bolton has already praised Mr. Bolsonaro, dubbing him a “like-minded” leader who the Trump administration could work with. The visit has yet to be confirmed. 
    </li> <li><strong>Doctors.</strong><strong> </strong>The Cuban government announced it will withdraw from the <a href="https://brazilian.report/society/2018/11/15/brazil-cuban-doctors-program/" target="_blank" rel="noopener noreferrer">More Doctors Program</a>, which sends healthcare professionals to vulnerable areas of Brazil, after Mr. Bolsonaro imposed several conditions for the continuity of the program. Part of the 8,000+ Cuban doctors in Brazil have already returned, and the Brazilian government wants to recruit replacements as soon as possible. Around 1,400 cities are at risk of being without any available doctors.</li> <li><strong>GDP.</strong><strong> </strong>While the Brazilian economy is not growing at the pace investors want, it is recovering better than banks had predicted. The Central Bank Index of Economic Activity shows that Brazil&#8217;s economy might have grown by 1.74% in the third quarter. The GDP numbers could show a 0.5-1% growth over that period.</li> <li><strong>Campaign financing.</strong><strong> </strong>The Electoral Justice system pointed out 23 &#8220;inconsistencies&#8221; in Jair Bolsonaro&#8217;s campaign accounts. His team responded yesterday, blaming the Superior Electoral Court for any flaws in declaring donations, and said it will give back any donations considered to be irregular.</li> </ul> <hr /> <h2>Challenges with public spending</h2> <p>Jair Bolsonaro promised to implement a more streamlined and efficient state. His future economic tsar, Paulo Guedes, wants to promote the privatization of assets and slash public spending in several areas. However, that is easier said than done. Not only has the government&#8217;s expenditure consistently increased, but the federal budget has become more and more restricted. Almost all of the government&#8217;s budget is taken up by so-called &#8216;mandatory expenses,&#8217; which are established by law and cannot be changed by the federal administration.</p> <hr /> <h2><img class="aligncenter size-full wp-image-16876" src="https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161.png" alt="" width="1200" height="800" srcset="https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161.png 1200w, https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161-300x200.png 300w, https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161-768x512.png 768w, https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161-1024x683.png 1024w, https://brazilian.report/wp-content/uploads/2018/11/c216fd92-a85e-4b5b-b873-034ef55f8161-610x407.png 610w" sizes="(max-width: 1200px) 100vw, 1200px" /></h2> <hr /> <p><img class="aligncenter size-full wp-image-16877" src="https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda.png" alt="" width="1200" height="800" srcset="https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda.png 1200w, https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda-300x200.png 300w, https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda-768x512.png 768w, https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda-1024x683.png 1024w, https://brazilian.report/wp-content/uploads/2018/11/0f054883-6f92-4f43-be51-70b796bb7dda-610x407.png 610w" sizes="(max-width: 1200px) 100vw, 1200px" /></p> <hr /> <h2>EU- Mercosur deal in jeopardy?</h2> <p>A free trade deal between the European Union and Mercosur—the trade bloc of Brazil, Argentina, Paraguay, and Uruguay—has stalled over the past 20 years. Nothing suggests that it will be completed any time soon. Over the past week, negotiators from both sides took part in five days of intense negotiations in Brussels. However, the advances were &#8220;millimetric,&#8221; as some of them said.</p> <p>South American <a href="https://brasil.elpais.com/brasil/2019/09/16/politica/1568669762_784011.html">countries</a> complain that the Europeans give few concessions to the agricultural sector. Members from the Old Continent fear that, once in power, Mr. Bolsonaro will decide to change the terms of the agreement, and that the appointment of Ernesto Araújo as the future Foreign Minister confirms the tendency of prioritizing relations with the U.S. to the detriment of Europe.</p> <p>Spain, Portugal, and Germany are the European countries which are keenest on a deal. But more protectionist countries have lobbied against terms that allow Brazil and Argentina to dump sugar, ethanol, and meat into the European market.</p> <p>A last effort to close the deal will happen next week.</p> <h4>Members of the European Parliament against the deal with Mercosur</h4> <p>Members of the European Parliament asked for an &#8220;immediate suspension&#8221; of negotiations until President-elect Jair Bolsonaro&#8217;s policies become clearer.</p> <p>&#8220;The continuation of negotiations between the EU and Mercosur would seem very negative, and could be seen as a message to the public that the EU doesn&#8217;t care about the political reorientation of Mercosur&#8217;s main member about the environment and about the fundamental elements of democracy,&#8221; read a letter signed by eight left-wing congressmen from multiple countries.</p> <p>In the environmental field, the letter&#8217;s signatories mention the future Brazilian federal administration&#8217;s signs that there will be a &#8220;green light&#8221; for the continuation of the Amazon&#8217;s destruction and a lack of care about indigenous rights. Moreover, the politicians cited Mr. Bolsonaro&#8217;s &#8220;revisionism&#8221; of the military dictatorship and lack of regard for human rights.

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.