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«Assault on Mercosul» | A Decade of Brazilian Diplomacy To Be Undone

serrafuzil

Governor Zé Serra in an unfortunate PR lapse with a military police assault rifle

Source: Jornal GGN (Brazil)

Translation: C. Brayton

Temer’s and Serra’s attacks on the Mercosul are based on ideology

According to a number of experts consulted for a recent report by Rede Brasil Atual, interim president Michel Temer and interim secretary of state José Serra are set on weakening Brazil’s ties with the Mercosul, based on their own personal convictions.

The fact is, however, that an immediate consequence of this strategy is the deepening of the economic crisis. According to the RBA, entering into unilateral trade agreements behind the back of the Mercosul bloc could well complicate things for Brazilian heavy industry as well.

The fact is, however, that an immediate consequence of this strategy is a deepening of the economic crisis. According to the RBA, entering into unilateral trade agreements behind the backs of the Mercosul bloc could well complicate things for Brazilian heavy industry as well.

Brazil’s interim minister of foreign affairs, José Serra, is conducting a stealthy campaign against the Mercosul. Serra argues that Brazil ought to enter into commercial treaties with a variety of countries. What is a stake is Mercosul Decision 32 of 2000, which states that member states would not enter into such agreements without first consulting the trade block as a whole.

Yesterday (Friday, June 24), interim president Michel Temer came out publicly in favor of this approach during a radio interview with Radio Estadão, arguing that Decision 32 must be interpreted in a more flexible manner, allowing Brazil to engage in free talks on tariffs with whatever trade partners it chooses.

But critics of the provisional government find the argument unconvincing. Not even the state industrial federation of São Paulo, FIESP, a principal voice behind the suspension of President Rousseff, is convinced. The fact is that in negotiating tariffs whenever it sees fit the interim government will find itself on the wrong side of the industrialists, deepening job losses and aggravating the economic crisis, according to sources interviewed by RBA.

One of these sources is economist Kjeld Jakobsen, a former secretary of foreign relations with the industrial labor federation CUT and the São Paulo city administration, and currently a board member of the Perseu Abramo Foundation.

In Jakobsen’s view, the “coup-plotting [interim] regime” has demonstrated how little it understands of economics and social policies, of human rights as well as trade policy. “There are several reasons for this. First of all, Mercosul membership does not prevent you from negotiating with other countries on terms inferior to those of the Mercosul’s Common External Tariff, the TEC. If you do this, you bring to the table what we like to call the diversion of trade, since the others will export to Brazil with tariffs lesser than the TEC, and Brazil will offer zero tariffs to the other four Mercosul nations,” he explains.

News on this topic that began to circulate on Friday pointed to the possibility of talks with Canada, Japan and Korea, as well as a bloc of small European countries such as Switzerland, Norway, Iceland and Lichtenstein. But this is not the whole of the matter, in the view of ambassador Samuel Pinheiro Guimarães.

“When you enter into a free trade agreement with another country and you set tariffs at zero, the other countries also lose out. What Serra intends to do is to begin with the sort of country with an eye to moving on down the road to larger economies, since these smaller countries are of little importance. They are absolutely insignificant, but he intends to use them to set a precedent for talks with other more important counties,” warns Guimarães.

“These people are anti-patriotic, anti-nationalist, and anti-labor; they oppose the popular will and the interests of workers. This is most certainly a measure that will worsen the recession. It is what every other country wants, which is to export to us,” the ambassador says. “Their lack of knowledge, their lack of patriotism, is enormous, as is their ignorance. Do you really think [Serra] wants free trade with Switzerland? What they want is a free trade program with the United States. And with Europe. It is a matter of ideology: They want NAFTA, proposed by the United States in 1994 but which never prospered. And of course, the U.S. wants this because they will export a great deal to Brazil, and currently has a very substantial trade surplus with us,” says Guimarães.

“These people are anti-patriotic, anti-nationalist, and anti-labor; they oppose the popular will and the interests of workers. This is most certainly a measure that will worsen the recession. It is what every other country wants, which is to export to us,” the ambassador says. “Their lack of knowledge, their lack of patriotism, is enormous, as is their ignorance. Do you really think [Serra] wants free trade with Switzerland?

What they want is a free trade program with the United States. And with Europe. It is a matter of ideology: They want NAFTA, as proposed by the United States in 1994 but which never prospered. And of course, the U.S. wants this because they want to export a great deal to Brazil; they already enjoy a very substantial trade surplus with us,” says Guimarães.

“These people are anti-patriotic, anti-nationalist, and anti-labor; they oppose the popular will and the interests of workers. This is most certainly a measure that will worsen the recession. It is what every other country wants, which is to export to us,” the ambassador says.

“If Decision 32/00 were to be revoked, it would mean the end of the Mercosul and cause a great deal of damage,because one of the most important markets for Brazilian exports is precisely the Mercosul, and especially in the area of industrial goods where Brazilian goods have been losing competitiveness for various reasons,” says Jakobsen. “The existence of Mercosul did not prevent China from becoming the key trade partner of Brazil in all categories of trade relations. This relationship increased 1,000% between 2002 and the present. And even here in Latin America, the second largest growth in trade was with Argentina, thanks to Mercosul. It has grown some 800% between 2002 and the present,” the economist states.

“But these guys could not care less, they are out to do deals. They do delays. You can  search on Wikileaks for past statements by Serra regarding Chevron. He swore to change the legislation. And no one said anything about it, this documented fact. These people have no sense of patriotism. They oppose our economic autonomy and development and  favor their own enrichment,” the ambassador says, recalling: “Just look at those who took part in the Cardoso government; look at how poor they are today. Look at the personal fortunes of the economists of the Cardoso regime. They are all millionaires,” Guimarães says.

<Assessing a possible Serra presidency in 2010, the State Department painted a much different picture:

Despite his tendency to keep the U.S. at arm’s length, Serra might well function as a positive interlocutor for the United States.

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