European Parliament conditions. Brazil, and Mercosur as a whole, is not giving up on its proposal for a huge free trade zone with the EU. My impression, based on a speech by Benita Ferrero-Waldner (see this column in bulletin 9313), was that the EU had dropped this objective: the European Commissioner spoke of resuming negotiations on an EU-Mercosur association agreement, without making any mention of an FTZ. In its “conclusions” of 13 November, the Council spoke of next generation “free trade agreements” with ASEAN, India and South Korea, but not Latin America. Brazil notes, however, that there was no need for either the Commission or the Council to mention Mercosur, because free trade talks are already under way. The Brazilian Head of Mission to the EU, Ambassadress de Azevedo Rodrigues said that “the free trade agreement between Mercosur and the European Union is one strand of the association agreement, that Ms Ferrero-Waldner spoke of”, and she stressed that, having long been suspended, negotiations resumed on 6 November and would continue next month (see our bulletin 9314). Brazil currently holds the Mercosur Presidency; the Ambassadress was, then, speaking on behalf of the association as a whole. The result is that, for the South Americans, the free trade zone remains the aim.
If the EU agrees, this zone could only be negotiated in full respect of the principles of the “new generation free trade agreements” as defined by the European Commission and approved by the Council (see this column in bulletin 9308). Full opening of borders must, then, sit within a coherent framework which covers, over and above WTO rules, non-tariff obstacles, the liberalisation of services and investment, cooperation on regulations and, of course, effective protection of intellectual property and the definitive elimination of counterfeiting. The European Parliament is bound by its resolution of last month which contains the full catalogue of conditions which free trade has to meet. I felt that this resolution was somewhat populist, putting forward, as it did, the principle of free trade while setting conditions which I felt were “completely unrealistic”. The catalogue is as long as Leporello listing his master's wives. It requires among other things: a binding dispute resolution mechanism; protection for geographical descriptions; health, phytosanitary and animal welfare standards in line with those of the EU, specific agreements on wines and liqueurs; and a regulatory framework for maritime transport. All set within a timetable for the conclusion of negotiations (which have been dragging on for decades).
Brazilian development. Certainly, Brazil has come much closer to European standards in several areas and it is conducting a vigorous campaign against counterfeiting; and this process is continuing. Criticising Brazil of today for choices made twenty years ago, when the free exploitation of the Amazonian Basin and deforestation were allowed, and even encouraged, would be a caricature of reality. Brazilian legislation is moving towards protection of the environment and transparency. Of course, it still has to be vigilant (80% of tree felling is still illegal), but control is improving, and difficulties are inevitable, given the vastness of the country. The Amazonian Basin (parts of which belong to Peru, Columbia and other countries) is as large as the EU25! But things are moving in the right direction, and some environmental battles have already been won in terms of public opinion and civil society. In Argentina and Uruguay, things are moving in similar fashion.
This new changing reality opens up almost limitless prospects for cooperation between the EU and the Mercosur countries in all areas, including trade development. Opening the market to Brazilian ethanol will, above all, be a test of the EU's desire to reduce its dependence on oil and to diversify its sources of energy supply while reducing environmental risks.
I remain convinced, however, that free trade is not the right solution either for the EU (which would lose its territorial balance and its natural environment) or for Brazil (which would rapidly exhaust the European market's absorption capacity), or for humanity, faced with the risk of food shortages. Tomorrow I will set out what I think is the way to go. (F.R.)