The exchange rate and the countdown to primaries

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The exchange rate and the countdown to primaries

Julio 2019

A trade deal between the European Union and Mercosur was finally announced in late June. It should drive the creation of trade, the access to cheaper inputs, the specialization to a higher scale of certain sectors and a greater integration of local firms to global value chains. The agreement promotes a greater regulatory harmonization, integration, the arrival of investment and the transfer of technology, increasing productivity, exports and growth. It is also an opportunity for Mercosur to awake from its long lethargy. In addition, it should boost reforms needed to modernize the tax and labor systems, in order to put the economy in more advantageous conditions to compete internationally. On the contrary, the agreement presents risks of regulatory capture from the EU and poses an enormous competitive challenge to certain productive sectors, with evident threats to the most protected industrial sectors that most certainly will oppose resistance to the deal.