Argentina outside Mercosur may accelerate the end of the bloc’s customs union

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Mercosur countries cannot negotiate trade agreements with other nations independently.

The tendency is for the bloc to create rules to make it clear that countries will be able to continue negotiating with other nations, without Argentine approval; idea was already discussed by Paulo Guedes

Argentina’s withdrawal from further Mercosur negotiations may accelerate the end of the bloc’s customs union. According to Estadão / Broadcast, sources linked to the international area believe that the discussion of making the group just a free trade area should gain momentum after the pandemic.

As members of a customs union, Mercosur countries cannot negotiate trade agreements with other nations independently.

If Mercosur remains only a free trade area, it will mean that products sold from one country to another, within the bloc, will not pay fees. But each nation will be able to close bilateral agreements without depending on the approval of the other members of the bloc.

Mercosur
A possible flexibilization of the bloc was already discussed by Paulo Guedes. Since the beginning of the Bolsonaro government. Photo: Miguel Lo Bianco / Reuters

Last Friday, 24, Argentina announced that it would withdraw from all the bloc’s negotiating agreements, with the exception of those already closed with the European Union and the European Free Trade Association (EFTA).

With the liberal agenda of the Minister of Economy, Paulo Guedes, and his promise to open the Brazilian economy, since the beginning of the government of President Jair Bolsonaro, the idea of ​​reformulating Mercosur and the flexibility of the customs union had been discussed.

In the midst of the coronavirus pandemic, however, in the short term, the tendency is for the Mercosur technical staff to create a rule to make it clear that Brazil, Paraguay and Uruguay may continue to negotiate agreements with blocs and countries without Argentine endorsement.

The rule should provide that Argentina may adhere to new agreements – a loophole that Mercosur members want to leave, in the hope that a more “pro-market” government may take over Casa Rosada in the future.

For the director of Industrial Development of the National Confederation of Industry (CNI), Carlos Abijaodi, Mercosur is in a moment of restructuring and will be forced to discuss the customs issue after the Argentine announcement. “At a lower level, this is what happened to the European Union with the departure of the United Kingdom. Mercosur members will have to sit down and discuss, ”he adds.

Pandemic

Even before Argentina’s withdrawal, the negotiation of trade agreements had been on hold since the beginning of the pandemic, which hampered meetings and talks.

For Abijaodi, the time is not to accelerate trade agreements. The CNI asked the Brazilian government to suspend negotiations on a trade agreement between Mercosur and South Korea. The entity fears that the terms currently on the table will harm Brazilian producers and increase the trade deficit with the Asian country by US $ 7 billion.

“We are going to get out of the pandemic with weakened companies and an extremely competitive foreign market. There is no way to close deals now ”, he added.

Source: https://economia.estadao.com.br/noticias/geral,saida-da-argentina-de-negociacoes-do-mercosul-deve-acelerar-permissao-para-acordos-bilateral,70003284947

Mercosur countries cannot negotiate trade agreements with other nations independently.

The tendency is for the bloc to create rules to make it clear that countries will be able to continue negotiating with other nations, without Argentine approval; idea was already discussed by Paulo Guedes

Argentina’s withdrawal from further Mercosur negotiations may accelerate the end of the bloc’s customs union. According to Estadão / Broadcast, sources linked to the international area believe that the discussion of making the group just a free trade area should gain momentum after the pandemic.

As members of a customs union, Mercosur countries cannot negotiate trade agreements with other nations independently.

If Mercosur remains only a free trade area, it will mean that products sold from one country to another, within the bloc, will not pay fees. But each nation will be able to close bilateral agreements without depending on the approval of the other members of the bloc.

Mercosur
A possible flexibilization of the bloc was already discussed by Paulo Guedes. Since the beginning of the Bolsonaro government. Photo: Miguel Lo Bianco / Reuters

Last Friday, 24, Argentina announced that it would withdraw from all the bloc’s negotiating agreements, with the exception of those already closed with the European Union and the European Free Trade Association (EFTA).

With the liberal agenda of the Minister of Economy, Paulo Guedes, and his promise to open the Brazilian economy, since the beginning of the government of President Jair Bolsonaro, the idea of ​​reformulating Mercosur and the flexibility of the customs union had been discussed.

In the midst of the coronavirus pandemic, however, in the short term, the tendency is for the Mercosur technical staff to create a rule to make it clear that Brazil, Paraguay and Uruguay may continue to negotiate agreements with blocs and countries without Argentine endorsement.

The rule should provide that Argentina may adhere to new agreements – a loophole that Mercosur members want to leave, in the hope that a more “pro-market” government may take over Casa Rosada in the future.

For the director of Industrial Development of the National Confederation of Industry (CNI), Carlos Abijaodi, Mercosur is in a moment of restructuring and will be forced to discuss the customs issue after the Argentine announcement. “At a lower level, this is what happened to the European Union with the departure of the United Kingdom. Mercosur members will have to sit down and discuss, ”he adds.

Pandemic

Even before Argentina’s withdrawal, the negotiation of trade agreements had been on hold since the beginning of the pandemic, which hampered meetings and talks.

For Abijaodi, the time is not to accelerate trade agreements. The CNI asked the Brazilian government to suspend negotiations on a trade agreement between Mercosur and South Korea. The entity fears that the terms currently on the table will harm Brazilian producers and increase the trade deficit with the Asian country by US $ 7 billion.

“We are going to get out of the pandemic with weakened companies and an extremely competitive foreign market. There is no way to close deals now ”, he added.

Source: https://economia.estadao.com.br/noticias/geral,saida-da-argentina-de-negociacoes-do-mercosul-deve-acelerar-permissao-para-acordos-bilateral,70003284947

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