After almost three years of negotiations, Brazil and the European Union have finally signed, last week, an agreement at the World Trade Organisation that will allow the expansion of Brazilian exports of agricultural and animal products to the EU. The measure will pave the way for an increase of almost R$250 million in Brazilian revenues.
According to the Brazilian representatives, in 2013, after Croatia’s entrance in EU in 2013, the country’s tariffs on some products were adjusted to fit the EU common tariffs, and, for that reason, taxes on Brazilian products were raised. In order to revert that situation, Brazil has initiated talks with the EU, aiming to achieve a win-win situation that would allow the country’s exports into the block with tariffs based on the Croatia former tariffs rather than the European union higher import duties.
The commitment signed between Brazil and the EU will increase the quotas of the Brazilian exports of sugar, chicken and turkey meat to the block as well as reduce the tariffs upon these products. According to the agreement, quotas for the Brazilian sugar will have an increase of 114.000 tons per year and also will have lower tariffs for a period of seven years. The agreement will be incorporated into the WTO list of commitments by the EU and cannot be changed without further negotiations by the interested parts. The Brazilian Ministry of Foreign Affairs believes that the understandings will be implemented shortly, allowing Brazilian producers to export products in a more competitive way as from the beginning of the second semester of 2016.
Although elementary, the agreement represents an important step towards the reduction of barriers and the strengthening commercial ties between both parties, especially at a time when Mercosur, block of which Brazil is part, and the EU are moving forward on the bilateral FTA negotiations. The good will of the EU in reducing barriers to sugar and chicken/turkey meat – traditionally some of the blocks “Achilles heels” – exported from Brazil already gives us a glimpse of what is to come, that is, willingness to negotiate and envision on the broader benefits of trade liberalization for both actors than in old constraints.