The free commerce deal between Mercosur and the European Union (EU), announce with fireworks and fanfare by Bolsonaro and celebrated by the press, reaffirms the submission of the country to the big international economic groups. And deepens the role of Mercosur and Brazil as colonies and suppliers of natural resources to the world market.
Written by Ricardo Ayala
The press and the government say the treaty will give Brazil access to a market of 750 million people. This is a lie used to convince the population to sell the country. By these criteria, Brazil should try to get a free market deal with China, since it has almost two billion people.
Saying that Brazil will have “access to a market” is just silly, since it is not Brazil that exports or imports, but the multinationals installed here, together with Brazilian companies. These people do not care about Brazil. What they want is to increase their profits.
The consumer dream of the exporters of poultry, meat, soy and other products which depend on abundant and cheap land is accessing the European market. But there were two big obstacles to this “free market deal”.
First, the European peasants, particularly those in France, were strongly mobilized against the increase of agricultural imports, since every country in the EU has a reserved production quota. For this, they receive subsidies to stop a drop in the prices of agricultural products. A trade deal would lead these peasants to ruin.
Besides, a second obstacle is that, currently, the importation of agricultural products in the EU has a priority clause with the former European colonies in Africa and Asia.
With the United Kingdom leaving the EU and Trump’s trade war with China, the deal reaffirms the EU as the defender of “free trade” and “Trump the protectionist”. But a lot of water will still go under this bridge, since the deal still needs to be approved by the parliaments of the 28 countries that are part of the EU and by the regional parliaments of Belgium.
Becoming a colony: consequences of the deal
Today, the goods of the so-called “agribusiness” of the Mercosur only enter the EU limited by quotas. That is, there is a limit for the purchase of agricultural goods (minus soy) and meat. The deal intends to end these importation quotas and gradually eliminate the tariffs. This was the main goal of the past Brazilian governments in this negotiation, since FHC, through the PT governments, to Bolsonaro.
On the other hand, the industrial sector installed in Brazil has nothing to win in this whole matter, since it has absolutely no chance of competing against the European industries. In exchange for the promise of opening the EU market to Mercosur agribusiness, the tariffs for industrialized products, goods which are components for industrial production, like auto parts would also have their tariffs reduced until reaching zero taxation.
It just so happens that the industries installed here import most components they use. One example is the sector which produces high and medium technology goods. In 2016, this sector was responsible for 33% of the Brazilian industrial production and 70,8% of the total good imports. But, to produce that, it had to import 71% of components and inputs.
More unemployment
If the zero taxation for industrial inputs comes to happen, companies head-quartered in the EU, like Volkswagen, Renault, among others, would be able to freely import most components. The result is that the final product will only be assembled here. Most jobs in the industrial sector, which pays higher than most jobs, would simply cease to exist
But can the cars produced here be exported to Europe? No, since they have fewer technological advances incorporated and do not follow the rules of greenhouse gas emissions. They will keep being sold on the Mercosur countries, like nowadays.
For agribusiness, on the other hand, this will be a good deal, since it increases the exports of raw materials. For the European multinationals which are here, the deal will also be great.
Besides, the deal will be a killing blow to the most important part of the capitalist industrial production: the capital goods industry, which manufactures machines and equipments and demands workforce with higher wages and technical levels. This sector will be replaced by imports.
All of this explains, on the bourgeois point of view, the labour and Pension reforms. The businessmen want to increase the exploitation of workers; transform Brazil in a big colony that exports soy, sugar cane and minerals; destroy the jobs which demand higher education expenses and pay even lower salaries. Welcome to the 19th century.
What is Mercosur
Founded in 1991, the Mercosur is a type of exporting platform for multinationals. Around 95% of the commerce between the Mercosur countries are absolutely free from tariff barriers. Currently Mercosur is formed by five full members (Argentina, Brazil, Uruguay, Paraguay and Venezuela, which is suspended since December 2016) and five associated countries (Chile, Bolivia, Colombia, Ecuador and Peru).
Translated by Miki Sayoko
