Brasília, 5/3/2004 (Agência Brasil) – The Brazilian government has made a request for compensation in case it losses farm exports with the EU expansion that takes place this weekend.
Brazil claims that the new members of the EU (Cyprus, Slovenia, Estonia, Hungry, Letonia, Lithuenia, Malta, Poland, Slovakia and the Czech Republic) will offer the old members of the EU goods they presently import from Brazil. In order to avoid market losses and eventual surtaxes on its exports to the EU, Brazil is asking for guarantees on a list of 100 goods.
However, there is a silver lining in this for Brazil. The ten incoming countries have a population of 75 million, bringing Brazil's biggest trade partner to a total of 450 million consumers. As the new members will have to adopt EU import tariffs, some of their surtaxes on Brazilian goods will actually fall.
Brazil is working together with its Mercosur partners on the new situation as they all move ahead with plans to establish a joint trading block with the EU - new members and all. This week, at a seminar on the future of relations betwen the two blocks, the general opinion was that in the short- term Brazil would lose market shares, but that over a longer period of time the losses would be recovered.
Products produced in the EU, such as sugar and meat, will probably face restrictions, while tropical products, such as coffee, will increase market share. Coffee, for example, will now go to Poland with a surtax ten percentage points lower than before because the Polish surtax was higher than the EU surtax on Brazilian coffee.
Franz Fischler, the EU commissioner for Agriculture, was the principal speaker at the seminar. He offered a carrot and a stick. First, he said the EU was making an enormous effort to open its market to agricultural goods. And then he added, "We can only make attractive offers if Mercosur is able to correspond to our needs. The opening has to be reciprocal. If both sides are willing, we should be able to reach an agreement by October," he said.
The Europeans are working on a gradual reduction of subsidies, which totalled US$3.2 billion in 2003. However, Fischler made it clear that the EU cannot suspend its subsidies unilaterally. "It is important for other rich nations, such as the US, to follow our example and modify farm legislation so that market distortions do not occur," he declared.
Translator: Allen Bennett
