Brazil is scrutinizing the trade deal announced last week by the United States and Argentina over suspicions that it violates the rules of the South American trade bloc Mercosur, three sources familiar with the matter told Reuters.
Brazilian diplomats are studying the document released by Washington on Friday to determine the scope of the deal. According to initial assessments, the agreement appears broader than the allowed frameworks for bilateral trade arrangements that Mercosur members have, two sources said.
Mercosur, in order to strengthen the bloc’s bargaining power, limits how far its members can go in concluding their own trade agreements with third countries.
Last year, amid global trade tensions fueled by US President Donald Trump’s policies, Argentina sought and received a temporary extension of exemptions from Mercosur’s common external tariff. Brazil and Argentina each received 150 exceptions, while Uruguay and Paraguay received larger quotas.
When asked about the Brazilian checks, an Argentine official said that “tariff reductions for American products are among the list of 150 exceptions to which Argentina is entitled.”
However, Brazilian officials claim that the new US-Argentina agreement actually includes close to 200 items.
– We are analyzing it very carefully in order to be fair – said one of the sources.
The governments of Brazil and Uruguay declined to comment on the case, while the foreign ministries of Paraguay and Argentina did not immediately respond to inquiries. The US State Department also had no comment.
Another source said the deal could also cause problems due to non-tariff issues, such as rules of origin, service standards and technical barriers to intra-Mercosur trade.
The same source assessed that the move by Argentine President Javier Miley, one of Trump’s closest allies in the region, to start unilateral negotiations with Washington makes it difficult to fit the agreement into last year’s Mercosur exceptions.
At a press conference on Friday, Argentine Foreign Minister Pablo Quirno said that Mercosur cannot prevent member states from entering into such agreements. He added that Milei could implement some parts of the deal by decree, while the broader trade and investment agreement would require parliamentary approval.
Mercosur, founded 35 years ago, faces frequent tensions as members seek to expand trade ties on their own. So far, no country has formally entered into a parallel agreement outside the bloc.
In 2006, Uruguay almost signed a free trade agreement with the US, but backed out due to fears of possible expulsion from Mercosur. Montevideo later tried to negotiate with China, which caused the dissatisfaction of Argentina, Brazil and Paraguay.
Former Brazilian President Jair Bolsonaro threatened to pull out of Mercosur in 2019, accusing the bloc of hampering Brazil’s trade ambitions, but neither he nor his successor, Luiz Inacio Lula da Silva, have taken formal steps in that direction.
Asked about the possible consequences if the Argentine deal goes beyond permissible limits, one Brazilian official said: “There are rules that must be followed.”
– If it turns out that this is indeed the case, we will have to convene the Mercosur Council and decide how the bloc will react – he added.
The next Mercosur summit is scheduled for the end of June in Asuncion, when Paraguay hands over the rotating presidency to Uruguay.
(Vijesti.ba/Fena)
