Trade bloc officials mercosur met this Tuesday to agree on their counterproposal to an annex to the European Union over a long awaited trade deal before meeting with bloc negotiators this month seeking to finalize the deal by the end of the year, Brazilian diplomats told Reuters.
Mercosur will try to unify its positions on Wednesday and Thursday to respond to the EU on the additions made on issues environmental the bloc made to the trade deal, said Brazil’s foreign ministry, where the talks are taking place.
Brazil felt attacked by an “adjunct letter” added this year to the trade agreement reached in 2019, which added environmental guarantees to the original pact, they said. The President’s Government Luiz Inacio Lula da Silvawhich has made bold environmental stewardship promises in contrast to its predecessor, has taken its time to respond.
A diplomat familiar with the negotiations said that Brazil would seek compensation for the attached letter in the form of an increase in export quotas to the EU or a reduction in the quotas of European products sold to Mercosur.
The sources said that Brazil would also seek new exceptions to the opening of government purchases for foreign companies in the healthcare industry, public sector construction and green technology.
Brazil’s foreign ministry and the EU declined to comment.
The Europeans drafted the accompanying letter in response to Brazil’s far-right former president, Jair Bolsonaro, who undermined environmental protections, allowing deforestation to skyrocket. Although Lula has reviewed Brazil’s environmental policy, the bloc’s diplomats say the EU still needs guarantees against a recurrence.
Brazil fears that the adjustments will lead to trade sanctions. Its diplomats complain that the new rules are beyond the Paris climate agreement that your country is complying with.
“There are new obligations that are unacceptable. If sanctions are applied, we want other concessions to compensate,” said a diplomat, requesting anonymity.
The EU recently passed a law that prohibits the importation of six products if they are related to deforestation, what Brazilian exporters and government officials considered a protectionist measure.
One of the Brazilian diplomats said the new law had muddied the waters by failing to distinguish between legal and illegal deforestation in Brazil, making it even more difficult to conclude trade talks by the end of the year.
The EU has warned that no attempt should be made to renegotiate parts of the trade agreement, given that it took two decades to reach an initial treaty. Brazilian diplomats say they are trying to adjust concessions and quotas so as not to reopen chapters that could paralyze the entire agreement.
A European diplomat in Brasilia said the EU hoped to resume talks in August with Mercosur’s counterproposal on the table. However, he stressed that it would be difficult to “rebalance” the concessions without reopening chapters of the trade agreement.
On the environmental guarantees that irritate the new Lula government, the European diplomat said that the EU recognized what Brazil is doing now to protect the Amazon rainforest.
“But we still need guarantees for the future, because we conclude agreements with the country and not with the government in power,” he stressed.
(With information from Reuters)
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