EU-Mercosur trade deal to support R&D in green chemicals – Brazil’s Abiquim

SAO PAULO (ICIS)–EU and Mercosur chemicals will greatly benefit from trade without barriers as per their free trade agreement (FTA) which will also encourage much-needed research and development (R&D) in new technologies for greener chemicals, Brazil’s chemicals producers’ trade group Abiquim said.

In a written response to ICIS, Abiquim welcomed the agreement announced last week by the EU and Mercosur for a free trade deal which would cover more than 700 million consumers in 32 countries (27 states in the EU, five in Mercosur).

After 25 years in the making, the two blocs finalized a deal on 6 December. The EU-wide chemicals trade group Cefic also welcomed the FTA, which still must be ratified by EU member states as well as some EU bodies.

The deal’s implementation is not 100% guaranteed, given the many scars the FTA’s text has left in some EU countries. Opposition in France is rife and is coming from all political sides, as the major agricultural producer in the European bloc fears its farmers will be hit hard by their Mercosur’s peers more competitive production.

“The conclusion of the partnership agreement between the EU and Mercosur is excellent news for Brazil and the chemical industry. After many back-and-forths, the final text reaches a balanced agreement in terms of market access and modernity, incorporating concepts of sustainability, phytosanitary standards, or intellectual property, among others,” said the trade group.

Abiquim added the current Brazilian government of Luiz Inacio Lula da Silva had been able to turn the “aspects of sustainable development as an advantage” for the country’s negotiating position, compared with other EU countries, a factor which it said would open the door to investment opportunities in the green economy.

Lula’s cabinet, in office since January 2023, has been able to reduce deforestation rates, which increased sharply under the leadership of former President Jair Bolsonaro. Lula, in his first and second terms as president (2003-2011) also reduced deforestation.

This factor often came up in the final stretches of the EU-Mercosur agreement, with Lula arguing it was Brazil who was ahead in sustainability.

NEW MATERIALS, NEW CHEMICALS
Abiquim’s director general, Andre Passos, said the deal would not only ease trade between the two blocks by eliminating or sharply reducing import tariffs and other trade barriers, but would also prop up R&D in greener raw materials to produce chemicals.

“Of special interest to the chemical sector is the focus sustainable development aiming to foster the integration of production chains towards the decarbonization of the economy. This will pave the way for R&D in new production technologies and the implementation of low-carbon productive investments,” said Passos.

“[This will be] In addition to encouraging the granting of favorable treatment for foreign trade of sustainable Brazilian products in accessing the EU’s single market.”

Thumbnail photo: Flags flying during European Commission talks on the Mercosur deal (Source: Wiktor Dabkowski/ZUMA Press Wire/Shutterstock)