The government of Luiz Inácio Lula da Silva (PT) opted to exclude two strategic sectors from the opening offer for European companies in a new trade agreement with the European Union. The document, which will be delivered to the authorities in Brussels in the coming days, provides for the protection of sectors such as health and food, as well as guaranteeing some protection for the national construction sector against EU competition in public works contracts in Brazil.
According to the draft of the agreement obtained by journalist Jamil Chade, from UOL, the opening to foreign competition will not cover government purchases of goods and services intended for school feeding programs or food security that support small farmers or cooperatives, in addition to government purchases related to the health sector, and intended to accelerate access to markets for zero-emission technologies.
Brazil also reserves the right to apply a “margin of preferences” for small and medium-sized companies, in order to prevent them from being harmed by competition from European multinationals. It will also be able to carry out public tenders for non-profit institutions for social assistance or “social services of public interest”.
With this decision, European companies would not benefit from a wide opening to supply medicines, food and equipment in government purchases related to health or social programs. The measure aims to favor the domestic industry and guarantee the supply of medicine and food without being excessively dependent on external suppliers.
Regarding the construction sector, Brazil points out that Europeans will be able to participate in public tenders, however, the country reserves the right to apply tax and financial equalization measures to guarantee equal conditions of competition and protect national construction companies from public works contracts.
The agreement between Mercosur and the EU, signed in 2019, is at an impasse and has not yet entered into force. The Lula government estimates that strategic points were ceded during Bolsonaro’s management, compromising sectors such as the national medicine industry. Now, the government seeks to reassess the treaty and ensure greater protection for sectors considered strategic for the country. The document will be evaluated at a meeting between the EU and Mercosur scheduled for early August.
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