Revisions proposed by the government should delay agreements with OECD and European Union

The Ministers of Finance, Fernando Haddad, and of the Environment, Marina Silva, said this week that Brazil intends to review the terms of the country’s application for entry into the Organization for Economic Cooperation and Development (OECD) and also some of the points of the agreement. of trade between the European Union and Mercosur.

The declarations, made at different times during the World Economic Forum, in Davos, Switzerland, are not surprising. After all, it is natural that the new government wants to review some details of the agreements negotiated during the term of former President Jair Bolsonaro.

However, if Brazil asks for important changes in the terms already discussed, the negotiations both for joining the OECD and the ratification of the trade agreement with the European Union will suffer considerable delays.

Long process at OECD

The process for joining the OECD is long and detailed. The candidate country has to adopt various commercial and governance instruments and rules.

Being part of the organization is like getting a seal of quality for business and investment. According to an estimate by the Institute for Applied Economic Research (IPEA), joining the OECD could help increase Brazilian GDP growth by 0.4%.

In the Bolsonaro administration, joining the OECD was a priority for the economic area and for the Itamaraty. During this period, Brazil became the first in the queue of candidates for the bloc.

Lula’s administration does not seem to demonstrate the same level of priority.

But Haddad’s statement in Davos that the country was still interested in the organization was considered positive by market analysts.

More than 20 years of negotiations with the UEA negotiation with the European Union is even more complicated, as it involves more than 30 different governments.

Mercosur has been negotiating with the European bloc for over 20 years, which clearly demonstrates the complexity of the agreement.

The announcement that an agreement between the two blocks was closed was made in June 2019, surrounded by optimism. But to enter into force, it needs to be ratified by the four members of Mercosur and by the 27 countries of the European Union.

This was never done, with the European side, led by France, complaining especially about rising deforestation in Brazil.

This can partially be considered a protectionist excuse, but the fact is that deforestation in the Amazon increased sharply during the Bolsonaro administration.

Therefore, Marina Silva’s declaration that Brazil will contain deforestation and unlock the agreement was very welcome by the Europeans.

However, by also asking for a review of the topics, the minister gave the password for further delays in the process. It won’t be easy to quickly conclude a deal with even more changes to its terms.