Treaty with the European Union Pushes Brazil Towards the Status of an Agricultural Colony
"The signing of this free trade agreement is inexplicable," writes Jeferson Miola
Jeferson Miola
The advance of the Washington Consensus in Brazil in the early 1990s materialized with the dominant oligarchies’ decision to elect Fernando Collor de Mello. Rede Globo played a decisive role, grossly manipulating the editing of the final televised debate on the eve of the 1989 election to harm Lula and favor Collor.
Once elected, Collor promised "neoliberal modernity," which consisted of fully opening the national market through economic deregulation and free capital flow.
The imported car became the symbol of this "new era" of "neoliberal modernization," marking the supposed end of the "era of carts in Brazil," as Collor mockingly referred to the domestically available vehicles at the time.
Now, more than 30 years later, at the end of 2024, the neoliberal media and elite sectors celebrate the free trade agreement between the European Union (EU) and Mercosur as if Brazil had finally achieved the neoliberal modernity once promised by Collor.
CNN Brasil even celebrated the news, highlighting that the "2025 Ferrari 296 GTB model will be R$ 1.5 million cheaper under the agreement." According to the agreement, wealthy Brazilians will pay "only" R$ 3.39 million instead of the current R$ 4.52 million for a Lamborghini Huracan Coupé LP 640-2.
The colonized and dazzled media also rejoiced that luxury European goods such as olive oils, wines, cheeses, and imported cars, particularly from Germany, will become more affordable for Brazilian and Mercosur consumers.
The treaty still has a long journey through national parliaments and European bloc institutions before being signed and implemented. Fortunately, there is still a real possibility of rejection, given opposition from at least France and Italy.
The agreement is unfavorable to Brazil and its neighboring countries, exacerbating the deindustrialization process and further deepening the primarization of our economies.
The agreement entrenches Brazil and Mercosur nations in trade with the EU as suppliers of agricultural and mineral raw materials, heightening dependency on industrialized goods imported from European metropolises.
Brazil’s average import tax is 15%, but there is significant variation depending on each product's competitiveness against foreign goods. For instance, wine is taxed at 27%, luxury cars at 35%, cheese at 18%, and clothing and chemicals at 20%.
Meanwhile, the EU’s import tariff, which is below 2%, even when eliminated, will have an insignificant effect and will not enhance Brazil’s export profile in terms of variety or volume of industrialized products to the European bloc.
According to Itamaraty, the products that may marginally increase their market share are primary goods with low added value—such as meat, sugar, rice, and honey. Even so, this depends on the EU's promise to increase import quotas, which is not guaranteed.
For peripheral economies, import tariffs are an essential tool for protecting national interests and industrial production. These tariffs safeguard local companies and jobs in less developed countries, mitigating disparities in technology, productivity, and economic power compared to advanced capitalist nations.
By eliminating import tariffs, goods produced locally by domestic industries will be displaced by their European counterparts. This will lead to deindustrialization, destroying national companies and jobs.
Additionally, the removal of tariff and customs barriers could lead European multinationals operating in Brazil to close their local branches, choosing instead to increase production and generate jobs in their home countries to export more goods to the now barrier-free Mercosur market.
Brazil already has robust trade with the European Union. In 2023, trade exchange reached $91.7 billion, with $46.3 billion in exports and $45.4 billion in imports—a nearly $1 billion surplus.
Given such intense trade and the need to protect and expand the regional community market of Mercosur, the signing of this free trade agreement is inexplicable. Its impacts are profoundly negative for Brazil's productive structure and that of its South American neighbors.
The treaty with the EU condemns Brazil to economic primarization, trapping the country in a past defined by agricultural and colonial underdevelopment.
It also opens the door for other industrial powers—such as China and the US—to demand the same conditions granted to the Europeans, rendering Brazilian industrial, scientific, and technological development unfeasible.
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