Dr. Catherine Tinker is a visiting Associate Professor at Seton Hall’s School of Diplomacy and International Relations, where she teaches international law and international environmental law.   She received her degree in Law from the George Washington University Law School and her master’s and doctor’s degrees in International Law from the New York University School of Law. Dr. Tinker is the founder and UN headquarters representative in New York of the Tinker Institute on International Law and Organizations (TIILO). Her main research themes are international law, sustainable development, the United Nations (UN) and Brazil’s Water Law.

In her interview to Panorama, the American researcher discusses what elements influence the international policies regarding climate change and how the international community sees this debate. Dr. Tinker makes remarks on the consequences of the US withdrawal from the Paris Agreement, one of the most important international instruments on climate change. Aditionally, she suggests that petroleum-exporting countries should switch to the search for alternative sources of energy.

Panorama: How do the capital, state and labor relations influence the ability of nations to reach their goals within the international climate change agenda?

Capital, regulations and laws of the state and labor relations all are crucial elements of any policy seeking to address the complex challenges posed by climate change and to limit increases in mean global temperature resulting from continued greenhouse gas emissions (GHG). The effects of climate change, such as extreme weather conditions (drought, flooding), sea level rise and ocean acidification, are projected to threaten food security globally, driving more people away from their homes seeking survival and leading to species extinction and altered ecosystems. Market forces are responding to the scarcity of natural resources and the need for changing patterns of consumption and production in a search for sustainability. It is clear that no nation, individual, private or public entity alone can achieve the delicate balance required to adapt to or mitigate the effects of climate change or limit GHG emissions. This is where international law based on good science comes in.

The debate has changed since the 1960s and 1970s, when sovereignty over natural resources was supreme and principles of international law like “common but differentiated responsibilities” allowed developing countries to delay compliance with international rules and standards while developed countries were held to account. Practical as well as equitable and historical reasons led to this approach and produced some results: progress in addressing global pollution in many regions, technological advances and scientific understanding of causes and effects in natural systems. Today there is a greater sense of shared responsibility worldwide, and principles of international law like the “precautionary principle or approach” suggest caution where scientific uncertainty exists about the effects of proposed human activities on the environment. Intractable global challenges require global solutions, and the engagement and commitment of all states is necessary to take the steps in the next decade or two that will protect life on earth for future generations.

The science of climate change has been elaborated in five consensus reports of the Intergovernmental Panel on Climate Change (IPCC) over the last 25 years. The IPCC, using the scientific method of testing hypotheses and predictions and reporting results, has reached areas of consensus among reputable scientists around the world. In its latest report, the panel concluded: “Projections of greenhouse gas emissions [carbon dioxide, nitrous oxide, and others which determine global warming] vary over a wide range, depending on both socio-economic development and climate policy. Anthropogenic GHG emissions are mainly driven by population size, economic activity, lifestyle, energy use, land use patterns, technology and climate policy.”[1]

Panorama: Currently there are three main instruments dedicated to producing standards and norms to mitigate global emissions of GHG, which are the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and the Paris Agreement. How do you see the evolution of the debate over climate change and the steps taken by the international community aimed to present a reasonable plan to face the challenges imposed by global warming?

The first instrument of international law dedicated to producing standards and norms to mitigate global emissions of GHG was the climate change treaty, the UN Framework Convention on Climate Change (UNFCCC), which entered into force in 1994, after being opened for signature in Rio de Janeiro at the Earth Summit, in 1992. With almost universal ratification, there are now 197 states party to the UNFCCC.[2]

The Kyoto Protocol to the UNFCCC, with 192 states party and the EU, is nearly as universal as the framework convention it elaborates and supports. The Kyoto Protocol[3] entered into force in 2005 and was initially applied to specific developed nations, establishing specific targets for reduction of GHG emissions. The Kyoto Protocol required 37 developed countries and the EU to limit GHG emissions and take other steps, but exempted 100 developing countries, including China and India, were exempted from reducing their emissions of certain GHGs by 5% below 1990 levels. When the Kyoto Protocol was extended to 2020, developing countries were required to meet responsibilities to reduce GHG emissions by at least 18 percent below 1990 levels in the period from 2013 to 2020 as well, and additional GHG were added to the annex.

In 2015, with the extension of the Kyoto Protocol until 2020, there is a greater emphasis on the responsibility of developing states as well as developed states. Several highly industrialized states that had ratified the original Kyoto Protocol withdrew, including Canada, on the grounds that, without the US and China, the Protocol was not effective. Nevertheless, with different parties, the Kyoto Protocol was extended until 2020, significantly with the addition of China.  Under the Kyoto Protocol, countries meet targets through national measures, with additional help from three market-based mechanisms: international emissions trading, clean development mechanism and joint implementation.

The Paris Agreement, the third international legal instrument on climate change, was a diplomatic triumph involving multiple stakeholders in a process begun long before the conference actually occurred in December 2015, in Paris. One of the goals of the Paris Agreement[4] is to limit global temperature rise to 1.5 degrees Centigrade above pre-industrial levels if feasible. There are now 160 states party to the Paris Agreement, which entered into force in 2016. The challenge now is how states will keep their commitments and whether the promised steps will be adequate and timely enough to avert disaster on an unprecedented scale if global temperatures continue to rise and GHG emissions are not adequately curbed.

Skillful leadership, long preparation through a series of UN, regional, national and local meetings and conferences and the use of social media and the Internet to reach a broad constituency all contributed to the success of the Paris Conference of the Parties to the UNFCCC, with the resulting adoption of the Paris Agreement. A large and influential cohort of private sector representatives, both multinational corporations and small and medium-sized enterprises, as well as representatives of local and national governments, civil society groups, regional and global organizations, scientists and academics were present in Paris and contributed in advance to the pledges made in the Intended Nationally Determined Contributions (INDCs). This wide participation created a strong outcome document and a sense of ownership of the commitments necessary for the implementation of the agreement. The voluntary commitments by 155 national governments in their Nationally Determined Contributions (NDCs) will be reviewed in five years. They are posted on the NDC Registry (interim), available at http://www4.unfccc.int/ndcregistry/Pages/Home.aspx, last accessed on August 23, 2017.

The UNFCCC and its Kyoto Protocol, plus the commitments in the Paris Agreement of 2015, together have the potential to achieve universal success in the goals and the dire consequences of failure to do so on a global basis.

Panorama: The UNFCCC has established a list of industrialized nations that should commit to stricter rules of greenhouse gas emissions. However, some developing countries have been increasing their emissions since mid-1990, particularly China, India and also some oil producer giants, such as Saudi Arabia. Bearing in mind the withdrawal of the US and Canada from the Kyoto Protocol, how is it possible to engage the most industrialized nations in the developing world to the climate change regime?

Developing countries such as China, India and Saudi Arabia are facing their own policy decisions. They contributed to the adoption of the Sustainable Development Goals in the 2030 Agenda for Sustainable Development, including Goal 13 on climate change, which acknowledges the UNFCCC as the primary vehicle of international law on climate change. Consensus in such global meetings and the resulting documents show that states understand that health, poverty eradication and environmental survival depend upon sustainable development. The pace and level of growth of the population in the largest developing countries show the urgency of their participation; for example, the amount of GHG emissions in China is approximately the same as in the US and is rising in India. In addition, petroleum-exporting states would be wise to recognize that oil is a non-renewable source of energy and switch to the search for alternative sources of energy, joining some oil and gas industry companies that are diversifying their investment portfolio to include clean, renewable energy sources.  It is the rapidly industrializing and developing countries that need to seriously address the causes and the effects of climate change for their own citizens and for the world, by adopting policies, regulations and laws to reduce GHG emissions and to incentivize the search for low-cost non-carbon energy sources and new technology. Market-based mechanisms enable developing states to participate in carbon-trading systems, with the goal of reducing atmospheric carbon and achieving “carbon-neutrality” worldwide.

Financing for climate change mitigation and adaptation in developing countries was established under the UNFCCC through the Global Environment Facility (GEF), and additional financing for developing countries will be available under the Paris Agreement by 2020, in the amount of US$100 million. A series of public-private partnerships have been formed through the UN and other initiatives to aid states in meeting their commitments to address climate change and its effects: natural disasters that kill people and animals, destroy cities and villages and require expensive rescue and rebuilding of new infrastructure, businesses and industry.

Panorama: What are the consequences of the US withdrawal from the Paris Agreement to both the climate change goals of the treaty itself and the wide diplomacy around it?

The consequences of the US withdrawal from the Paris Agreement are regrettable, but should not be overstated. Many steps have already been taken by most highly industrialized nations like the US and the member states of the EU over the last several decades to achieve efficiency in fuel, machinery, appliances, automobiles and manufacturing, and advances have been made in reducing pollution from industrial and municipal operations, researching alternative energy sources and reducing dependence on fossil fuels. The Paris Agreement is based on new and higher self-defined benchmarks for all countries to do more to reduce carbon emissions and address climate change, and through this process the Paris Agreement involved every country in the process, even if not all states have ratified the Agreement to date. In the US, which is a federal system like Brazil, the national pledge at Paris set standards that were to be implemented by individual states within the US. There are already many efforts to reduce GHG emissions on the regional, state or municipal level in the US that will not be affected by its withdrawal on the national level from the Paris Agreement, such as California’s aggressive GHG emissions restrictions and strict automobile equipment requirements. Another example is the Northeast Regional Greenhouse Gas Initiative (RGGI)[5] in the New England and Mid-Atlantic states, the first mandatory market-based program in the US. Since 2009, it has operated successfully by putting a price on carbon and establishing a regional budget for CO₂ emissions from the power sector. Such programs show that cap-and-trade systems both reduce carbon emissions and result in economic growth in a region. On the municipal level, New York City’s OneNYC plan[6] addresses GHG emission reductions, mitigation and adaptation to the effects of climate change and resilience measures important in coastal areas to achieve disaster risk reduction from the effects of climate change.

Panorama: How has the American society been responding to the United States decision to leave the Paris Agreement?

In June 2017, President Trump announced the US withdrawal from the Paris Agreement[7] in favor of negotiations to re-renter or negotiate new terms considered more favorable to the US.  This followed the Executive Order on Energy Independence[8], in which President Trump directed the US Environmental Protection Agency (EPA) to review President Obama’s Clean Power Plan[9], with the possibility of repealing the plan entirely or modifying it after review. The Clean Power Plan was designed prior to the Paris conference in 2015 to replace the use of coal and oil in power generation plants in the US with renewable sources of energy, increasing the US’s ability to meet its NDC commitment under the Paris Agreement. By making this commitment, the US encouraged other countries to make ambitious pledges at Paris. One US NGO the Environmental Defense Fund estimated that if fully implemented, the Clean Power Plan would reduce GHG from the power sector to 32% below 2005 levels. The oil and gas industry is pushing back.

A year before the 2017 Executive Order from President Trump, in 2016, the implementation of the Clean Power Plan by President Obama was challenged by 29 individual state governments and agencies, with the backing of industry groups and utilities. The Plan was defended in this action by a group of 14 environmental and public health groups and others. Implementation was stayed by the US Supreme Court and remanded to the DC Circuit Court of Appeals. That Federal court, as recently as August 8, 2017, continued the stay for an additional 60 days, meaning that the US Environmental Protection Agency cannot proceed with actions to develop or implement the Clean Power Plan. This case challenges the authority of the Federal Environmental Protection Agency to regulate GHG emissions from power plants in the US under the Clean Air Act, a signature environmental protection law adopted in 1970 and revised in 1990.  Federal rulemaking procedures are being followed to review agency powers to implement laws passed by Congress in this case, which will include a review of the science of climate change used by the agency in formulating the rule.[10]  The head of the EPA has announced a plan for “the three Es”: environment (protection), economy (sensible regulations that allow economic growth) and engagement (with state and local partners).[11] In this context, the announcement that the US was withdrawing from the Paris Agreement was not surprising to many, since the blocked implementation of the Clean Power Plan proposed by President Obama interfered with one of the primary means of meeting US commitments in Paris.

In late August 2017, an advisory group on climate change was disbanded by President Trump. This group, with representatives from 17 federal agencies, was tasked with creating a scientific report and recommendations based on scientific consensus within the US government, a document that has been produced four times in the past. A draft of the 5th National Assessment Report on climate change (CSSR) was circulated in June 2017, shortly before the advisory group was disbanded. The draft was not made public, but a copy reached the press.[12] It demonstrated the effects of climate change under several different scenarios and made predictions of how human activities were responsible for increased emissions of carbon dioxide and other GHGs. The report was due to be adopted and released by the Government in 2018. The draft report is not available at the website of the US EPA; however, the EPA website has some technical information on climate change indicators.[13]

American society has been responding in a variety of ways, with conflicting advocacy in the courts, Congress, public meetings by a broad range of non-governmental organizations and local governments and demonstrations in the streets. Despite the developments at the national level, individuals and local communities as well as some states in the US are continuing to make efforts to reduce energy costs and usage, develop alternative sources of energy and include them in the mix with fossil fuels and natural gas and continue to participate in regional and local compacts. Individual responsibility and personal lifestyle choices continue to be important to many, especially among young people, whose future is most at risk. Failure to renew government subsidies for solar power in recent national legislation is likely to negatively impact the growth of the industry in the US and raise the cost of using solar power for the production of electricity. People who chose to install solar panels received tax credits in many states and generated power, which lowered their electricity costs; ending tax credits could discourage expansion of solar energy or at least raise its cost to use. Subsidies and tax credits are continuing under federal law, however, for developing wind energy in the US.

The outcome of the domestic situation in the US in a broad sense will affect how national policies and laws are created and implemented on climate change and every other issue and will impact the participation of the US in various international or regional conferences and initiatives as well as the US compliance with instruments of international law.

[1] IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp., available at https://ipcc.ch/report/ar5/, last accessed August 21, 2017.  Additional climate science data is widely available on websites such as the US National Aeronautics and Space Administration (NASA) at https://climate.nasa.gov/news/ and Columbia University’s Earth Institute at http://www.earthinstitute.columbia.edu/, last accessed August 23, 2017.

[2] Available at http://unfccc.int/essential_background/convention/items/6036.php, last accessed on August 23, 2017.

[3] Available at http://unfccc.int/kyoto_protocol/items/2830.php, last accessed August 23, 2017. Note that the US did not participate in the negotiations on the Kyoto Protocol from 2001 on, and officially is not part of any meetings or obligations.

[4] Available at http://unfccc.int/paris_agreement/items/9485.php, last accessed August 23, 2017.

[5] Available at https://www.rggi.org/, last accessed on August 23, 2017.

[6] Available at https://onenyc.cityofnewyork.us/, last accessed on August 23, 2017.

[7] Available at https://www.whitehouse.gov/blog/2017/06/01/president-donald-j-trump-announces-us-withdrawal-paris-climate-accord, last accessed August 23, 2017.

[8] Executive Order on Energy Independence,” signed March 28, 2017, available at https://www.epa.gov/Energy-Independence.

[9] “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” 80 Fed. Reg. 64,662 (October 23, 2015)

[10]  See https://www.epa.gov/Energy-Independence, last accessed August 20, 2017.

[11] Available at https://www.epa.gov/home/back-basics-agenda, last accessed August 23, 2017.

[12] Available at https://www.nytimes.com/interactive/2017/08/07/climate/document-Draft-of-the-Climate-Science-Special-Report.html?mcubz=3.

[13] Available at https://www.epa.gov/climate-indicators, last accessed August 23, 2017.

The free-trade agreement between the Common Market of the South (Mercosur) and the European Union (EU) is a topic for debate among the academic community and entrepreneurs alike. To encourage the debate, Panorama Internacional invited two scholars, our interviewees, to answer some questions that will help us better understand that subject matter. International business consultant Frederico Behrends ponders that, despite the obstacles, the agreement may have a political understanding this year, so that it can be implemented in 2018. Luiz Augusto Faria, lecturer at the Federal University of Rio Grande do Sul (UFRGS), in his turn, reckons Brazil has the advantage of trade preference with Latin America, which would be jeopardized if the free-trade agreement with the EU were signed.

Meet our interviewees:

Frederico L. Behrends is an international business consultant and has been working with foreign trade for more than 40 years. Industrial chemist with a degree from the School of Engineering of the Federal University of Rio Grande do Sul (UFRGS), he is a councelor and consultant for the Foreign Trade Council (Concex) of the Federation of Industries of the State of Rio Grande do Sul (FIERGS) and coordinates the Thematic Negotiation Group (GTNI) at the same institution. Moreover, he has worked as a lecturer in the graduate courses in Foreign Trade at the following institutions: UFRGS, the Regional University of the Northwest of the State of Rio Grande do Sul (Unijuí), the University of Caxias do Sul (UCS), the University of Vale do Rio dos Sinos (Unisinos).

Luiz Augusto Faria is an Associate Professor at the Federal University of Rio Grande do Sul (UFRGS) in the International Strategic Studies Graduate Program and in the undergraduate courses in Economic Sciences and International Relations. He holds a degree in Economics, a Master’s and a Doctor’s degree in the same area from UFRGS. He was a researcher at the Economics and Statistics Foundation (FEE) between 1982 and 2014. He does research on Political Economy and International Economics and works mainly in the analysis of Brazilian economy, economic integration, globalization and foreign relations of both Brazil and the Common Market of the South (Mercosur).

Panorama: In 2015, the big companies accounted for 94.35% of the country’s exported value. Out of this total, 244 companies exported a total of US$145.64 billion. How to conciliate, within the scope of the Brazilian trade negotiations, the interests of a small group of large export companies and the interests of other Brazilian companies that operate specifically in the Brazilian domestic market?

Frederico L. Behrends: There is a consulting mechanism to the private sector regarding international negotiations done by the Brazilian government called Brazilian Business Coalition (CEB in Portuguese). The CEB, which is coordinated by the National Industry Confederation, is formed by class entities such as associations, federations and employers’ unions that seek to influence the Brazilian international integration strategies representing their companies’ interests, including medium and small businesses. Certainly, conciliating the interests of such a heterogeneous vast universe of companies is not an easy task. The difficulties regarding the harmonization of the offering lists are a challenge inherent to all countries, especially those that negotiate as economic blocs. However, it is necessary to find a mutual understanding that can benefit Brazilian companies independently of their size. As for the Brazilian companies that operate exclusively in the domestic market, such an agreement will make them rethink their strategies, due to the sharp demand increase for European products. It will be fundamental for these companies to seek for partnerships, invest in technology for their products and in improvements in their production processes in order to enhance their competitiveness. Today the Brazilian companies possess a kind of tariff “shield” in Brazil that protects them with an average 11% import aliquot.

Luiz Augusto Faria: Economic concentration is a natural tendency of capitalism which can only be modified by specific policies. Europe has been consolidating the two largest budgets of the European Union (EU) for decades, as exemplified by the Common Agricultural Policy and the Regional Development Policy. In these two cases, there is an intention to direct efforts towards the development of small enterprises, either through family farming or through local productive arrangements, with collaborative networks between small firms. In Mercosur, there is a space for what we call SMEs (small and medium-sized enterprises), in which the focus is on policies that promote them. But for this, political initiative is needed. For instance, the automotive agreement was very supportive of the big automakers, which had gains in scale and expertise, but it was disadvantageous for local component suppliers, largely swallowed up by the advance of multinational suppliers. Preventing this from happening depends not only on regional content requirements, but also on credit and other forms of incentives.

Panorama: The negotiation of a free-trade agreement between Mercosur and the European Union has been going on for more than two decades. What is the main obstacle to the conclusion of this agreement?

Frederico L. Behrends: The agreement has gone through several obstacles over the past two decades. After the negotiations started, in 1999, they did not move between 2004 and 2010, when they were then resumed during the Mercosur-EU Summit. Since 2010, important movements have been made, but at a very slow pace, largely due to the lack of interest of the Brazilian and Argentinian governments at that time. The focus of the Brazilian trade policy, for example, was far from the negotiation of free-trade agreements that, when eventually concluded, involved countries with low relevance and exchange potential. In addition, there was also some fear on the part of the manufacturing industry regarding the possibility of entry of better quality European products. On the other hand, agricultural producers have always seen, upon the conclusion of the agreement, a great opportunity to sell to the Europeans, a market of more than 500 million consumers. Today, with the change in the position of the governments of Brazil and Argentina, which are closer to countries with greater economic relevance, and the greater interest of the Europeans after the U.S. reneged on the Transatlantic agreement, there is a possibility that the agreement will have a political conclusion by the end of this year, so that it can be implemented in 2018.

Luiz Augusto Faria: Negotiations began in the last decade of the 20^th century, in a political environment dominated by the ideas of commercial liberalism, a belief that sees the increasing import and export flows as a benefit to society per se. Since then, a lot has changed. Mercosur has taken a skeptical position on the free market and adopted policies to promote regional development. In addition, there was the 2008 crisis and the economic stagnation of Europe. Aside from these changes, since the beginning, the focus of the discussions is on access to markets on both sides. The Europeans want greater participation in services and industrial products, and we face the wall of protectionism of the agricultural policy of the European Union. There is little margin for concessions, which is why it is so difficult. Moreover, the importance of the European market to South America has been declining since the late 20^th century. Our biggest partner today is Asia, with China ahead.

Panorama: Latin America as a whole is one of the main destinations for Brazilian export of manufactured and semi-manufactured products. In addition, domestic consumption has a consistent relevance in the Brazilian Gross Domestic Product (GDP). In that sense, to what extent would a free-trade agreement between Mercosur and the European Union benefit Brazil?

Frederico L. Behrends: One of the main factors that has made the Latin American market so important and with so much potential, especially for the Brazilian industrial sector, is that over the past three decades regional tariff preferences have been negotiated with several countries within the Latin American Integration Association (ALADI) as well as important economic complementation agreements, such as the ones signed by Mexico, Peru and Chile. Currently the European Union is Brazil’s main trade partner, representing a product exchange of more than US$64 billion, 1/5 of the total. The share of the export of processed products to the European Union has grown by an average of 3.6 percentage points in the last two years. The conclusion of the free-trade agreement between Mercosur and the European bloc, besides being a good opportunity for the manufacturing industry to seek to improve its competitiveness, as far as technology, processes and governance are concerned, might bring a great benefit to the agro-industrial sectors as well as to the agricultural machinery and implements, which are very important industries for our state. Therefore, the impact of a megadeal of this size is quite big, and it is fundamental that both the government — taking into account the execution of structural reforms and investments in infrastructure — and the companies prepare themselves for the opening of the market that the country will promote in the coming years.

Luiz Augusto Faria: Brazil exports industrialized products of higher added value to Latin America and basic products to Europe. It was not like this in the recent past, when we also exported industrialized goods to Europe and the US. It was the use of the exchange rate as an instrument against inflation that hampered the competitiveness of our industry. In the last two or three decades, we have been losing market share to the Asian countries. As long as the exchange rate remains at the appreciated level of the last few years, there is no great prospect of gaining competitiveness in the industrial sector, let alone in the service sector. What we have today is an advantage of trade preference with our neighbors that could be jeopardized by a free-trade agreement with the EU or the US. The loss of competitiveness by the appreciated exchange rate has already led to a very large retrogression in the composition of our trade flows. We have returned to the point in which we used to exchange raw materials for products with greater technological content. In addition, even in the South American market, Brazil and Argentina have been facing a competition with Asia in the supply of industrialized products.

Panorama: Brazil and Argentina, the main economies of both the region and Mercosur, have currently adopted an economic management more in line with the liberal orthodoxy. However, like the United States, Europe is experiencing a more isolationist political and economic process focused on domestic issues. Do these differences in contexts hamper the negotiations?

Frederico L. Behrends: It is possible to perceive, as an aftermath of the global economic crisis of 2008, the strengthening of the criticism about globalization and the integration project that started more than 60 years ago, leading to the alteration of the political balance in several EU countries, with the increase in popularity of far-right parties. However, the European Commission, which is in charge of the international negotiations inside the bloc, does not seem to have altered its trade policy in the search for access to new markets and negotiations considered strategic and relevant. Besides the negotiations with Mercosur, the European Union negotiates with other partners of economic relevance, such as South Korea, Canada, Chile, Mexico, among others. With the election of Donald Trump to the U.S. government and his decision to renege on the Trans-Pacific Partnership (TPP), deals such as the Transatlantic (between the U.S. and the European Union) have not advanced either, which has made the Europeans’ interest in concluding the agreement with Mercosur grow. What caused some sort of apprehension on the part of Mercosur was the tied dispute between Emmanuel Macron and Marine Le Pen in the French election. However, with the victory of the pro-European Union candidate, the perspectives of support remain. In Germany, the elections are going to take place this year; however, the party of Angela Merkel is expected to keep in power. Therefore, there is a mutual interest of the blocs to resume the negotiations as soon as possible, regardless of the sociopolitical issues that affect the European countries, such as Brexit.

Luiz Augusto Faria: That’s another problem. The recent political changes regarding the two major actors of Mercosur bring back the environment of the 90s. An ideological vision, in the bad sense of the term, is becoming predominant once again, proposing unilateral concessions without any kind of compensation. Fortunately, today we have the common external tariff as a precaution mechanism, forcing the opening of the regional market to be negotiated by all countries, which imposes some sort of needed pragmatism and guarantees a greater level of protection. However, Argentina’s indebtedness and the dismantling of the Brazilian oil and infrastructure chain are a sign that we are jeopardizing the possibilities of a future development. It will be a great waste not to use the huge deposits of South American hydrocarbons to boost industrialization and technological development. In addition, the income generated by this sector has the potential to produce a surplus large enough to finance social policies, as required by the Brazilian law, before being modified in the current framework of misgovernment.

Panorama: It is known that the economy of Rio Grande do Sul is extremely interconnected with the dynamism of the national market, which in turn has a strong interdependence with the international economy. It would then be possible to list the state’s economic sectors that would gain and the ones that would lose in a scenario in which the two commercial blocs come to an agreement?

Frederico L. Behrends: Products that have a high competitive differential tend to be more successful within the implementation of an international agreement, for when tariffs are reduced to zero costs go down. Those who have a low competitive differential due to strong competition, lack of value added or outdated technology will certainly have more difficulties. Their advantage will be related to a greater ease in technology transfer and import of inputs. Therefore, it will be fundamental for the companies to analyze their performance, their niche markets and, especially, their competitors in order to create alternatives that will increase their competitiveness. It is also worth mentioning that the agreement will include regulatory convergence, which will stipulate harmonization of production standards for certain products. In general terms, we can highlight that the footwear industry will benefit from the agreement because the European tariff for those products is still significant and affects the competitiveness of the exports of both Rio Grande do Sul and Brazil, despite the current good sales performance of this sector in the European market. With the agreement and, consequently, the tariff being reduced to zero, this industry will possibly gain a lot of competitiveness, since the footwear made in Rio Grande do Sul meets the European quality standards. Besides the footwear, the leather and tobacco industries are also likely to benefit. As a general rule, it is expected that the agreement will bring bigger gains to the Brazilian agriculture and agribusiness. As a consequence, the State of Rio Grande do Sul, due to its strong industrial base linked with the field, should benefit from the Mercosur-EU agreement.

Luiz Augusto Faria: It is hard to make any prospects at this moment, because negotiations are very specific. For example, still in Dilma Rousseff’s term, Mercosur signaled a concession in the dairy sector, in which Europe has a structural production surplus, now directed to its aid to Africa. Since, at the beginning of this chain, we have the family farming of dairy producers, the Landless Rural Workers’ Movement (MST) and the National Confederation of Agricultural Workers (Contag) pressured and the theme was set aside. In today’s political conditions, this sector would have no dialogue with negotiators. Free market advocates always give arguments making use of gains in competitiveness and technological advancements as a result. Although Europe is less averse to technology transfer than the US, as the agreements in the nuclear or military industries show, these results are only achieved through intergovernmental negotiations — away from the market and competition. The experience within the World Trade Organization (WTO) shows how difficult the agricultural issue is for Europe. Selling soybeans to feed the French cows and importing cheese or butter makes no sense.