Brazilian Economy Minister Says Brazil Would Like Mercosur to Lower Tariffs, Allow Individual FTAs
Brazil's Economy Minister Lucas Ferraz said that two years ago, Brazil proposed to the other three countries in the Mercosur trade bloc that they should reduce the average tariff by half. It's currently 11.5%, and he said the Brazilian government believes it should be 6% to 7%.
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No tariff reduction was made, and Ferraz said Brazil is now proposing “as a signaling of good will,” that Mercosur reduce each tariff by 10%. Ferraz spoke March 25 during an online program hosted by the Council of the Americas. “We believe we will have this reduction approved by the four partners. That doesn’t mean we will stop there,” Ferraz said. “We are not happy with the current rules we have in Mercosur nowadays, especially when it comes to obligation to negotiate free trade agreements en bloc.” But he said the fact that Argentina was able to opt out of negotiations with South Korea gives him hope that Brazil might be allowed to negotiate a comprehensive free trade agreement with the U.S. in the future. The other two Mercosur countries are Paraguay and Uruguay.
Ferraz emphasized the trade facilitation initiatives Brazil is undertaking to reduce time delays in importing into and exporting from Brazil, such as getting rid of unnecessary import licenses and the implementation of a single window program. He said that a study suggested that reforming trade bureaucracy is the equivalent of reducing a tariff by 14%.
The U.S. is Brazil's second-largest export market and its second-largest source of imports, Ferraz said, and before the COVID-19 pandemic, there was almost $60 billion in two-way trade a year. Some members of Congress oppose negotiating a free trade agreement with Brazil because they see Brazilian agricultural exports as too close a competitor to the U.S. agriculture sector; others oppose an FTA over environmental and human rights issues in Brazil.
Ferraz acknowledged that agriculture is very sensitive in the U.S., but said that sanitary and phytosanitary standards, rather than tariffs, are the most significant barriers to U.S. exports -- and to Brazilian exports, as well. “We are all heavy users of these measures, and we need to tackle this by discussing conformity assessment, regulatory convergence,” he said. He said the recent trade agreement inked with the U.S. does address non-tariff barriers in agricultural trade.
He was asked about the barriers to express carriers in Brazil, a trade matter that could be handled without a comprehensive FTA. “We would like to facilitate this kind of service in Brazil,” he said, “but this is, of course, a very sensitive issue in our economy, but we are positive we can make some progress on this.”