This month’s European Union parliamentary elections may have dealt a coup de grâce to the long proposed Free Trade Agreement (FTA) between the EU and the Mercosur trade group formed by Argentina, Brazil, Paraguay and Uruguay. After two decades of on-off negotiations agreement in principle was reached by the two sides in 2019. However, ratification has been delayed and new disagreements have emerged over environmental protection mechanisms, state procurement procedures, and a general global shift towards more trade protectionism in trade, which some analysts have described as ‘deglobalisation.’ 

These trends were evident in the EU election results on 6-9 June when the far-right made significant gains across a number of countries, including France, Germany and Austria. France’s President Emmanuel Macron reacted to gains by the far-right Rassemblement National party led by Marine Le Pen by calling a snap legislative election for the end of the month. On the campaign trail both politicians struck populist and anti-free trade stances which were partially to accommodate the demands of electorally powerful but disgruntled European farmers. Le Pen said she opposed free trade agreements ‘in which we sell cars from Germany and sacrifice French farmers to competition from Brazilian poultry and Canadian beef.’ In a speech Macron said he had opposed the Mercosur FTA over Brazilian poultry and had put in a clause ‘that holds farmers from other countries to the same standards as our own.’ 

Senator Nelsinho Trad, who heads the Brazilian mission to the Mercosur parliament, struck a cautious note, saying it was necessary to wait until the new EU Parliament convened to assess whether the FTA could still be saved: ‘I would wait to see how these new lawmakers will perform’, he said. Trade relations between Brazil and the EU may also be somewhat strained over the new European Union Deforestation Regulation (EUDR) which comes into force at the end of this year. It requires all EU imports of wood, soya, beef, cocoa, coffee, palm oil and rubber to be banned if they have supply chain links to deforestation. The onus to prove the use of ‘deforestation free’ supply chains largely lie with exporters. The Associação Brasileira das Indústrias de Óleos Vegetais (ABIOVE) says that complying with EUDR could involve the costly business of having separate plantations, silos, paths, and ships to serve the European market. Many farmers argue they are victims of what they call European ‘green protectionism.’ 

The June 2024 issue of Brazil Focus also includes the following:

Politics

• Lula faces an uphill battle over the fiscal balance
• Antunes Rocha takes up the fake news fight
• Lula seeks to woo evangelical voters
• Sergio Moro is still in trouble   
• Rio de Janeiro’s Governor Cláudio Castro escapes impeachment

Taking the Pulse

• Full costs of southern flooding catastrophe are still emerging 

Foreign Relations

• EU elections: a killer blow for FTA with Mercosur? 
• Vice president bolsters China trade

Security

• Mercosur worried over organised crime and fentanyl
• Police bodycam rules stir controversy

Economy & Business

• Q1 GDP data shows economy outperforming but outlook uncertain
• Finance Minister Haddad sounds the wrong note
• Interest rate outlook turns slightly more hawkish
• Zamp buys Starbucks
• Possible takeover for Gol?

Environment

• Pantanal fires causing concern
• Lula announces package of environmental initiatives

Energy Sector

• Magda Chambriard sets out plans for Petrobras
• Little enthusiasm for Mantega as Braskem director