How the new presidente of Brazail can help EU farmers
The political trends that brought Brexit and Donald Trump aren’t all bad for farmers here.
Brexit is definitely bad news.
And the global trade war which Donald Trump may trigger could bring a huge economic shock.
But EU dairy farmers could yet come out on the winning side of that war, because Trump has left his own country’s dairy industry (the world’s second biggest) isolated, and is likely to halt its milk production increases every year this century, to reach nearly one fifth of the world’s estimated total production.
Now, disruptive political trends have brought a new Trump of the Tropics, in the shape of Jair Bolsonaro, the newly elected President of Brazil, by a substantial electoral margin.
He will take office in January, after an election in which his “Let’s make Brazil great” motto copied Trump’s election slogan.
He has pledged to copy one of Trump’s most contentious foreign policy actions by moving the Brazilian Embassy in Israel from Tel Aviv to the contested city of Jerusalem. Like Trump, Bolsonaro has also strongly criticised the United Nations.
His two biggest challenges are pulling the country out of its economic doldrums, and cracking down on rampant crime and corruption. But the good news for farmers here is that Bolsonaro seems uninterested in a free trade deal between the Mercosur group of South American countries and the EU. Instead, he has said he wants to reduce Brazil’s engagement with regional trade blocs such as Mercosur, favouring improved ties with Washington.
As a result, the president of Uruguay, Tabare Vazquez, has predicted as “very difficult” agreement on a free trade treaty between Mercosur and the EU.
The treaty talks between the EU and Mercosur (Brazil, Argentina, Uruguay and Paraguay) were already at a standstill, with agricultural quotas among the main stumbling blocks to progress. EU trade negotiations with the Mercosur countries have been going on since 1999, and have failed time after time. Now, Bolsonaro’s election (a seismic shift to the political right in a country governed by leftist parties for most of the past 15 years) could be the obstacle to jinx them once again.
That’s music to the ears of EU farmers, after EU negotiators anxious to agree their most lucrative trade deal ever offered the South Americans 99,000 tonnes of beef access to the EU at low import tax rates. With Irish farmers already facing the Brexit loss of the UK market for 52% of their beef, a Mercosur trade pactwould have been the last straw. Lucky for them, the South American negotiators asked for more, apparently seeking preferential access to EU markets for 150,000 tonnes per year of their beef.
The deal would also include the EU taking 150,000 tonnes per year of Mercosur sugar, free of tariffs.
Now, it may all come to nothing, with Bolsonaro’s comments including hints about pulling his country out of the Paris climate Accord. With the EU saying it will sign trade deals only with Paris climate change accord signatories, that would blow trade talks right out of the water — unless Europe is really desperate to swing the estimated €21-29 billion it could gain through increased exports of industrial goods to South America.
With Bolsonaro also making election promises to farmers that he’d curb the policing of the sector by Brazil’s environment agency, and perhaps open up protected indigenous territories in the Amazon to farmers and loggers, he is distancing himself further and further from EU principles, and EU farmers can breathe an even deeper sigh of relief, as Mercosur trade talks prospects dwindle, not for the first time in 19 years.
Like the US and the UK, Bolsonaro seems set to isolate his country from influences such as the United Nations, China and large negotiating blocs like the European Union. But this time, it is good news for EU farmers
“The treaty talks between the EU and Mercosur (Brazil, Argentina, Uruguay and Paraguay) were already at a standstill, with agricultural quotas among the main progress” stumbling blocks to