Brazil Looks to Negotiate Agreement with the British After Brexit

Folha International
26 jun 2016

The United Kingdom's exit from the European Union (EU) is not a good sign and may delay the free trade negotiations Mercosul has been negotiating with the European bloc. The Brazilian government was hoping to speed up the talks over the coming months.

The United Kingdom was the biggest heavyweight in support of the agreement, applying pressure to speed up negotiations during all of the decisive moments.

The UK's position is considered to be more in favor of free trade in comparison to the Europeans, such as Ireland and France, who fear the arrival of South American agricultural products. As such, without the British, negotiations could be difficult.

According to a source from the Brazilian government interviewed by Folha, next steps have yet to be defined because no one expected the split, and it left negotiators in shock. One of the fears is the domino effect that Brexit may cause, such as Scotland's exit and the exit of additional countries from the EU.

On Friday (24), Minister José Serra (Foreign Relations) said he intends to initiate a parallel agreement between Brazil and the United Kingdom. According to him, this could help Mercosul's negotiations with the EU.

"I would have preferred no split, but since it happened, we have to have strategies in place for foreign trade policy; the picture has changed and we need to revise our strategy", Serra said.

"Pursuing negotiations with England separately as we will do, will, in some way, motivate the EU to negotiate with us. Therefore, it has effects in both directions, which are very diverse".

When asked if the EU could become more resistant, Serra said: "On the contrary, it provides an incentive for negotiation; if you are negotiating with a partner who has several options, you automatically become more invested".

Brazilian negotiators, however, fear that the strategy could hit the EU like a bucket of cold water. Analysts believe that Mercosul should negotiate with the Europeans or the British but not both at this time.

For José Augusto de Castro, AEB (Brazilian Foreign Trade Association) president, the United Kingdom's exit "will surely play negotiations". The European Union's attention, previously focused on Mercosul and the Atlantic Trade Agreement, will now focus on rebuilding with the United Kingdom.

Researcher Lia Valls Pereira, from the FGV (Getulio Vargas Foundation), says the European Union must first let Mercosul know if it plans to stand by its position, even without the United Kingdom.

"No delays [in the schedule with Mercosul] would mean that the European Union will continue negotiations without the United Kingdom. That is still unknown", she said.

The United Kingdom does not represent a significant market for Brazilian exports, representing 1.5% of Brazilian sales abroad and focusing on primary products: gold, coffee and soy.

Brexit will have indirect effects on Brazil. The split increases uncertainty over the recovery of the European economy and affects the price of Brazilian commodities sold overseas.

fonte: Folha International