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Dombrovskis: "The agreement with Mercosur may fail if Brazil does not commit itself against the deforestation of the Amazon"

2020-10-22T17:13:43.394Z


The new EU Trade Commissioner highlights that Trump's protectionist policy has created problems for world trade


Trade Commissioner Valdis Dombrovskis at the European Parliament on October 2. YVES HERMAN / Reuters

Valdis Dombrovskis (Riga, 49 years old), vice-president of the European Commission, took over just a few weeks ago the trade portfolio of the community body, but has already been able to verify that he has gotten into swampy terrain.

In just over a week, Boris Johnson's government has threatened to abandon negotiations for a post-Brexit pact with the EU;

the trade war with the US has added another 3,600 million euros in possible retaliation by the European side on account of the conflict over Airbus and Boeing;

and the EU trade agreement with Mercosur (Argentina, Brazil, Paraguay and Uruguay) threatens to collapse, after having been negotiated for 20 years, due to doubts about its impact on the deforestation of the Amazon.

The former Latvian prime minister acknowledges in this regard during an interview with EL PAÍS and other large European media: "We are in contact with the Mercosur authorities, especially Brazil, to see what kind of real commitments they can offer us that allow the ratification of the agreement".

Question.

The WTO (World Trade Organization) has authorized the EU to impose tariffs on the US amounting to 3.6 billion euros in retaliation for the illegal subsidies to Boeing.

But the same happened with European aid to Airbus.

Will you seek a truce to nullify both penalties?

Answer.

From the beginning we have said that we prefer an agreement so as not to have to impose tariffs.

We would like to reach an agreement and a pact on disciplinary measures in the aviation sector.

But if it is not possible and the United States does not withdraw its tariffs, we will have no choice but to impose ours.

P. The

United States does not seem to be satisfied with the measures adopted in Europe to reach the truce.

A.

That's right.

The US position seems to go beyond what is foreseen in the WTO rules.

Airbus already adjusted the contracts in July, so we consider that we already comply with the WTO rules and we do not see justification for the US to continue imposing tariffs in that case.

Q.

Washington also has a trade battle open with China.

Are you afraid that the EU is the collateral damage of that crossfire?

A.

The protectionist policies of the [Donald] Trump Administration have created problems for world trade, but also between the US and China.

Our position is invariable: we believe that all disputes should be resolved within the framework of the WTO.

And we urge both parties to do so.

That said, the EU shares with the US some of the concerns regarding China's economic model in matters such as industrial subsidies, technology transfer or intellectual property rights.

But that does not require unilateral actions, but rather a reform of the WTO rules that respects the multilateral order.

Q.

Will anything change after the November 3 elections in the US?

R.

Difficult to say, I am not the spokesman for the US Administration.

But it is obvious that the Trump Administration is the one that started the trade conflict with China, so perhaps there may be changes with a new Administration.

Q.

The European Commission celebrated the trade agreement with Mercosur last year as a historic milestone.

But the European Parliament and several nationals do not seem ready to ratify it.

R.

I think it is a good agreement with a chapter on sustainable development.

Furthermore, it is the first agreement that Mercosur signs with a large global partner, so the EU gets the advantage of being the first to arrive.

At the same time, there are a number of concerns, especially regarding the deforestation of the Amazon and the commitment of the Mercosur countries to the Paris Agreement [on emissions reduction].

We are in contact with the Mercosur authorities, especially those of Brazil, to see what real commitments they can offer to guarantee the success of the ratification.

What is clear is that if we go ahead with the procedure without doing anything it is possible that the agreement will not be ratified, which would be regrettable.

Q.

What commitments do you want from Brazil?

R.

Those related to deforestation and the Paris Agreement.

That is the specific problem and the cause for concern.

That is why we must dialogue with the Brazilian authorities and see how it can be resolved.

Q.

Negotiations with London for a trade deal after Brexit don't seem to be going any better either.

A.

We remain determined to achieve the closest possible relationship with the United Kingdom and to intensify the negotiations to achieve this.

A no-deal would be bad for everyone, but especially for the UK, so it is important to keep the dialogue going.

P.

The Executive of Boris Johnson threatens to break the negotiations and opt for a commercial relationship like the one the EU maintains with Australia.

A.

Many comparisons have been made.

With Australia, at the moment, we do not have a trade agreement because we are negotiating it, so it is premature to draw conclusions.

But in any case, the UK is a few kilometers from the EU and the two economies are deeply interconnected.

Australia is 10,000 kilometers away and the intensity of trade relations is nowhere near those between the EU and the UK.

So it doesn't seem like the most suitable example.

P.

The Commission expected a drop in growth in the EU of -6.3% in 2021, but the data is getting worse at times.

R

.

In our spring forecasts we assumed that the restriction and confinement measures of the first semester would disappear the second.

Now we see that, unfortunately, this is not the case.

There is a second wave of the pandemic and it will have an impact on our numbers.

Q.

The needs that were calculated for the Recovery Fund of 750,000 million euros may also fall short.

Do you think it will be necessary to expand it or a new fund?

R.

The priority now is that the money reaches the countries as soon as possible and that is why I urge the Council and Parliament to reach an agreement and the countries to ratify the Own Resources decision [essential to start the aid].

These are large resources, with 1.8 trillion euros in total between the Multiannual Financial Framework and the Next Generation EU fund [official name of the Recovery Fund].

But, of course, we continue to monitor the situation very closely and are ready to come up with new proposals if necessary.

Source: elparis

All news articles on 2020-10-22

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