Recently, after the current Brazilian President Lula announced that he would submit a proposal against the EU Southern Common Market Free Trade Agreement in Europe and South America, Pedro Pasos, Director General of the Brazilian Chemical Industry Association, stated that Brazil should quickly implement the EU Southern Common Market Free Trade Agreement. The Brazilian chemical industry welcomes the rapid implementation of this treaty.
Brazilian President Lula previously stated that he will submit a proposal against the current free trade agreement within a few weeks, aimed at quelling concerns about deforestation in Brazil. The current version of the EU Southern Common Market Free Trade Agreement was reached in 2019, but due to the rapid deforestation of the Amazon during the Brazilian presidency, Bosonaro, the EU is concerned about Brazil’s climate commitments and the formal implementation of the treaty has been delayed.
Pedro Pasos stated that the implementation of the EU Southern Common Market Free Trade Agreement will promote Brazilian chemical trade, although the EU remains a net exporter of chemicals, while Southern Common Market countries are net importers. According to data from the Eurostat, in 2022, the EU exported chemicals worth 553 billion euros, imported chemicals worth 363 billion euros, and had a trade surplus of 190 billion euros. However, the chemical trade between the European Union and the Southern Common Market only accounts for a small portion of the trade. According to data from the European Council of Chemical Industries (Cefics), the chemical trade volume between the European Union and the Southern Common Market in 2022 was 13.6 billion euros, and the EU’s trade surplus was 5.2 billion euros.
Recently, Cefics and 18 other industrial and trade organizations also urged EU authorities to quickly approve the EU Southern Common Market Free Trade Agreement in a joint letter. Cefic believes that Europe’s manufacturing industry can expand its influence through the treaty and seek new sources of essential raw materials for energy transformation.
Pedro Pasos stated that the EU Southern Common Market Free Trade Agreement should respect sensitive issues in certain goods and services trade that the Brazilian chemical industry considers. These issues may touch any economic sector in practice. The treaty should also strengthen the “mutual benefit and high multiplier impact” on the markets of the two trading blocs, as well as the “approximation” of regulatory conditions. The chemical industry of the European Union is regulated by the REACH system, which is the strictest regulatory system in the world, while the four Southern Common Market countries have four different regulatory systems.
However, from the current political level game between the EU and countries such as Brazil, it can be seen that the EU Southern Common Market Free Trade Agreement between the EU and South America will not be implemented soon. The current focus of the debate is that the European Union hopes to include some binding provisions on deforestation in the treaty, and the growing Brazilian agricultural sector may drive the trend of deforestation. The European Union and the Southern Common Market union also oppose the current form of agreement. In June of this year, the French parliament voted against the current form of the EU Southern Common Market Free Trade Agreement. Even if the 31 national parliaments of the European Union and the Southern Common Market begin to approve this treaty, the process will take several months or even years.