My dear President of the Government of Spain, José Maria Aznar, Mr Ingo Ploger, co-president, representing Mercosul, of the Mercosul-European Union Business Forum,
Mr Guy Dollé, co-president, representing the European Union, of the Mercosul-European Union Business Forum,
My dear Celso Amorim, Brazilian Minister for Foreign Relations, My dear interim Minister for Development, Industry and Trade, Márcio Fortes, My dear Carlos Lessa, president of BNDES, Ambassadors, Businessmen and women, My friends,

For me, the mere fact that you are here holding this meeting demonstrates your confidence, indeed your certainty, that the alliance between Mercosul and the European Union (EU) can not only become stronger, but can also, I would say, establish itself as a strategic alliance, particularly for the Mercosul countries.

I feel perfectly comfortable in saying this because last year, during the presidential election campaign, when the issue of the Free Trade Area of the Americas (FTAA) was discussed - which often, here in Brazil, is along the lines of "all or nothing" - we, wanting to go beyond the bounds of those discussions, declared that the most important model for integration was that of the European Union.

And I think we have a lot to learn, because it (the period during which the EU was formed) was not just one year, or even one decade. There were decades of discussions along the way to the creation of multilateral institutions, the effect of which was to consolidate one of the most important economic, political and cultural blocs in the world.

Obviously we, in Mercosul, may avoid certain errors made by the European Union twenty years ago. We will be able to make a start on the basis of what the European Union got right.
That is why, when we were fighting the election, we said it was necessary for us to restore the prestige of Mercosul. And in order to restore the prestige of Mercosul it was important, first of all, that we strengthened our ties with Argentina, and that Argentina itself had a government committed to strengthening Mercosul.

Destiny, and the electorate, decreed that someone with a firm commitment to Mercosul would come to power in both Brazil and Argentina.

If the two governments put into practice the enthusiasm (towards Mercosul) demonstrated during the electoral process, integration and coordination with the other Mercosul countries will certainly be more easily achieved. And it will be even easier to enable South America, in a short space of time, to be part of an important bloc - Mercosul. In order to achieve this, we will have to create new mechanisms. We are going to dedicate ourselves to this. We are not going to trip up along the way.

This Fourth Session of the Mercosul-European Union Business Forum at a particularly important moment in the economic relationship between Mercosul and the European Union. Three of the four countries that make up Mercosul have undergone a change of government this year. In each case, it was in fact more than a simple change of government. It was an unequivocal demonstration of the fact that Mercosul constitutes a strategic objective for our countries.

We are determined to recover the historic vision of regional integration that lies at the heart of the Mercosul project. We are working towards consolidating a Customs Union and moving towards the creation of a Common Market. However, we do not want merely to liberalise trade, but to put forward initiatives in the political, economic, cultural and scientific fields. In this way we will be creating better conditions for development and the prosperity of our peoples, and reinforcing our collective presence in the international community.

In following this path, our inspiration has always been the European Union. That is why we dare to propose the creation of a Mercosul parliament, and to move further along the way to a regional single currency. Indeed, it is in order to further develop the idea of a (single) currency that we are creating the Monetary Institute.

As well as serving as a paradigm for integration, Europe as a whole remains Brazil's principal trading partner and source of foreign investment. I take the opportunity of this visit to Brazil by President Aznar to remind you of what he himself has already said here: Spain is the second biggest foreign investor in our country.

Our affinity with Europe is also historical, cultural and political. We see the world in a similar way. All of this forms a solid base that we must value, and on which we must build a closer relationship that is more profitable for both blocs.

We have a dream of going further, of making Mercosul the nucleus of a broad integration project for our continent. In the idea of forming a genuine South American Community of Nations, we see a powerful instrument for overcoming our socio-economic vulnerability. To move in this direction, we intend to start by financing infrastructure projects, for example in the energy, transport and communications sectors. We invite the businesspeople here today to take a close look at these excellent opportunities, which are also available to European investors.

It is important to remind the business community that BNDES, our Development Bank, and CAFI, the institution binding together the community of Andean countries, that in July, if my memory serves me well, there was a major seminar in Rio de Janeiro in which we discussed infrastructure projects for the physical integration of the countries of South America. Firstly, we identified the projects we ourselves in South America could put into practice with our own money. Second, we identified the projects for which we would need to seek funds from institutions other than our own. Next, we identified those projects on which we could work alongside private sector initiatives from South America and the rest of the world.
I hope that, at some point this year, the presidents of the South American projects decide upon these initiatives, so that we really can say there is a project leading towards integration. And why? Because, generally, in South America and in Latin America as a whole - as President Aznar is no doubt well aware - there isn't a single politician who hasn't made a speech saying we need integration across the continent.

Moving on from speeches to actual reality, it is clear that integration presupposes roads, bridges, waterways, energy, telecommunications, ports, airports. Without these things, a speech about integration remains merely theoretical, something for election campaigns.

As the election campaign is already over, and all of us have the obligation of governing our countries, we are determined to move on from the discourse about integration that was heard throughout the last century, in order to try to make the project a reality, believing as we do that South America has the potential no longer to be seen by the developed world as one of the poor areas of the planet. We have people, we have - in many countries - technology, and we have the political will. We know we need to exert this political will, and employ the skills of our professionally qualified people, alongside the sectors that have capital to invest, to make this project a reality.

Our countries are involved in intense and complex negotiations - for example in the WTO, and regarding the FTAA - that will define the new form to be taken by international trade. These negotiations will determine the opportunities, the risks and the limits we will face in our efforts to build a fairer and more prosperous world. We, in Mercosul, are engaged in this process with the intention of reaching balanced and fair agreements. What we want is equality of opportunity, which is to say unimpeded access to markets and an end to abusive restrictions that distort international trade to the detriment, most of all, of developing countries. The billion-dollar agricultural subsidies have created veritable trade apartheid.

In the meetings I have had in Europe, I have been trying to convey the message that Brazil and Mercosul will be committed to doing our share, as long as other countries do theirs. The issue of trade is a very delicate one, and I'd like to digress from my written speech in order to say something to you.

If we don't over-elaborate our theories about trade relations, if we look at what we do in our lives day-to-day, we will see that no agreement between two people or two countries will be welcome if one side feels it is losing out. The good agreement is the one in which both sides feel they have gained, can see the advantages of what has been agreed, and go home happy.

I always think of the example of the man in the street who buys a second-hand car. One guy leaves home in the morning to sell a car and another leaves home in the morning to buy a car. The good agreement, the good piece of business, is when the guy who went to sell his car gets home and says to his wife: "I made a great deal. I sold my car for a good price." And the guy who bought the car, for a good price, gets home and says to his wife: "I did an extraordinary bit of business. I bought a car for an extraordinary price, within the limits of what I could afford." There you have it - an extraordinary agreement.

It has to be like that between countries. It's normal for countries to want to have a trade surplus. All of them want a trade surplus - all of them. Everyone in government proposes having a trade surplus. It's just that you have to ask the other countries, which also want one, whether they will let you have a trade surplus. But it is entirely possible to create an equal and balanced relationship.

That has been one of the concerns of my government. In various countries I have visited, especially countries smaller than Brazil, with which we have a substantial trade surplus, I have saying to my colleagues in the government that we need to buy more from those countries, to make the relationship more balanced. If not, we won't be helping that country to develop. We have to show a certain generosity in order to have equilibrium in the relationship, in order for one country not to suffocate the other.

It is for this reason that we are committed to negotiating. It is said that we don't want to negotiate the FTAA. On the contrary, Brazil wants to negotiate and is happy to stay up all night negotiating. What we don't want is to be defeated in the FTAA. If we get a draw, that's great. But we don't want to suffer a defeat, because we want to defend our economy, our industry, our agriculture, our trade, our jobs and our sovereignty.

And I know that the other countries want to defend their interests in the same way. Human wisdom has to guide us along the way to finding a point of equilibrium at which it is possible to have an agreement that lets everyone go home saying "I won". If this happens, then those who win will certainly be the populations of the countries that made the agreement.

That is why the European Union is so important for us. Not that it is easy to negotiate with the European Union, because in the negotiations I'm sure that the Aznar government plays hard in defence of Spanish interests, that Chirac plays hard to defend the interests of France, that Schroeder does the same for Germany, and so on.

Now, it is with this toughness, but also with fairness, understanding the need for the developing countries to have their chance, that I believe we need to negotiate using all our energy. Because I believe in human beings, I believe in human relations, and I believe the difficulties that now seem insurmountable may not appear insurmountable a few months or a few years from now.

What we can't do is go to the negotiating table thinking we are poor little things, with lots of poor children, and lots of people going hungry, and that we have a lot of unemployment, and that we are a Third World country. If we go to the negotiating table with that attitude, we'll already have lost. When it comes to negotiating - and you businesspeople know this - no one respects someone who arrives hanging his head in a submissive way. It's necessary to have pride because if you don't respect yourself, the other side in the negotiations won't respect you either.

This has to be a maxim for us. It's a hard game, but it's a worthwhile one. If it weren't that way, we wouldn't be here, discussing with the Mercosul-European Union relationship with such interest.

People think that, in business, merely saying you are poor means that someone is going to give you things for free. I went to the meeting at Davos and I participated in the Ibero-American meeting. I saw the way some colleagues spoke and, well, with such a show of poverty you're not going to get very far.

If I'm the leader of my country and I play the poverty card when making a speech somewhere in the world, who's going to help me out? I have to believe in what I'm doing and I have to gather partners who will do it with me, and do it is the most competent way possible, or else no one is going to help us out. And also because we don't want to be treated as if we were second-class. We want to be treated as equals.

And here, in South America, in Latin America as a whole, at many times in the history of the continent, leaders have easily made themselves subordinate to the interests of other countries, to the detriment of their own people. And for us it has been a bitter harvest.

That is why we are going to put all our strength and all our energy into negotiating, so as to achieve the best agreements imaginable for all the parties involved.

It is necessary to understand that international trade is still a long way from being a relationship between equal partners. It needs to be liberalized in such a way as not to extend or reinforce the inequality existing between countries. We know that developing countries must insert themselves more effectively into the flows of trade in order to derive real benefit. Therefore it is imperative that trade distortions be removed, particularly with regard to agricultural subsidies.

This is very important. I don't imagine that President Chirac or President Bush, in order to help the poor in South America, are going to lose their elections and lose the votes of the farmers in their countries. I am a politician myself, so I don't entertain that idea. The idea I do have is that we need a lot of talking, a lot of arguments, a lot of political force in order for them to understand that it is possible to convince their colleagues and make a reasonable agreement with developing countries.

I don't imagine that I'm going to send my minister to talk with our friend Chirac and he's going to arrive there saying, "Look, I've come here from Brazil, where there are lot of children going hungry", and someone's going to get all concerned and say, "OK, we'll sort out our prices here so that you can export more". I believe in God, but I don't believe in miracles, at least not in that sense. I believe in other kinds of miracles.
Given that the European Union is seen as the great protectionist agricultural heavyweight, the position that comes to be adopted will be the key to the success of the negotiations.

My friends,

The negotiations that Mercosul is pursuing with the European Union have the same importance, and contain the same risks, as other major negotiations.

I am convinced the association between Mercosul and Europe is mutually advantageous.

And we have been making important advances in the negotiations between the two blocs. The European Union is today the only one of Mercosul's trading partners to which offers have been made in all the relevant areas, which signals a keenness to negotiate on our part.

In order to reach a good agreement, however, it is necessary for the European union to present a package of offers in the agricultural sector that will enable Mercosul to make a significant corresponding offer in terms access to its markets. It is worth remembering that the majority of agricultural products of interest to Mercosul are still in the "not offered" category in the negotiating process.

As we see it, agriculture can no longer be treated as just another point on the negotiating agenda. It must be one of the main points.

Our problems need to be addressed urgently. We can't allow the difficulties involved in the multilateral negotiations in the WTO to slow down our bi-regional negotiations. The fact that we have problems in the WTO doesn't mean we don't have the history, the culture and the political will to move ahead with a bi-regional agreement.

It is important that, at the next ministerial meeting of Mercosul and the European Union, the latter presentsa detailed proposal that reflects a genuine interest in negotiating a preferential agreement with Mercosul.

My friends,

The achievement of a wide-ranging trade agreement between Europe and Mercosul depends of the full engagement of the business community, and other sectors of society, in the negotiating process. The Mercosul-European Union Business Forum offers a channel for such participation. Here it will be possible to stimulate the negotiations and evaluate their results. We are counting on your making a critical contribution in order for the negotiations follow a path that is mutually acceptable and beneficial on both sides of the Atlantic.

I am well aware that this session has given rise to valuable recommendations, particularly with regard to business facilitation. I am certain that the ladies and gentlemen here will take away with them the conviction that a closer relationship between the European Union and Mercosul will be a vital instrument in promoting not only business but also the well-being of our people.

I would like to finish by saying to the businesspeople here today that Brazil is certain that in Mercosul there will be no backward steps. We know that, in being the biggest economy in South America, we have to have projects, including financing, to help with the extension of infrastructure in poorer countries, in countries with lesser capabilities than Brazil or Argentina.

We are taking on this commitment we believe that in a turbulent world of today, if South America has democratic stability, and economic stability, it can present to the world an opportunity not only for investment, but for partnership - who knows, perhaps in a way we have not done before at any point in our history?

The visit by President Aznar gives me personal pleasure because he has brought, today, a proposal for an agreement regarding a strategic relationship between Brazil and Spain. And I said to President Aznar that we will set up an interministerial commission, analyse the proposal in full - it is very complex and very important - and then on the 15th (of November) we will be together again in Santa Cruz de la Sierra for the Ibero-American meeting. And, who knows, maybe there we can sign the protocol of intentions which will prove to be the most important document signed by Brazil and Spain in recent years.

This demonstrates the confidence President Aznar has in our government and our country, which indeed had already been demonstrated by the Spanish business community which, as President Aznar said, already constitutes the second largest source of foreign investment here.

And President Aznar's visit allowed me to have a little joke with him today. I spent a part of my life thinking he was a conservative. And he spent a part of his life thinking I was a left-winger. Well, after having now met on two occasions, it turns out he's not so conservative, and I'm not that left wing. We are two leaders. He, obviously with much more experience than I have, lives in a continent where the coming together of the European Union reflected a vision more democratic than certain others in other parts of the world, and Spain knew how to take advantage of it.

I, who have been visiting Spain since 1980, and Portugal since 1980, am able to see the differences between the two countries then and what they are now. And not only because they have had money. A lot of countries have money, but corruption diverts it away from necessary development projects.

I think the confidence President Aznar has showed in Brazil clearly demonstrates that you can you can make your political speeches whenever you want and you can employ whatever ideological definitions you want, but when it comes down to actually governing, you have to face reality. You can't always do what you want. You do that which is important, within the limits of what is possible.

I always remember that when I was president of the Metalworker's Union, in 1978 and 1980, during the big strikes in São Paulo, a journalist asked me what I was more afraid of, being killed by the military regime or being imprisoned. And I said to her: "What I'm most afraid of is lying to the workers who have placed their trust in me." And today, as president of the Republic, I say this: "What I'm most afraid of is lying to the people." I know why I won the election, I know the responsibilities we have, I know what Brazil needs, I know what our people need and I know that when I come to the end of my time in power, the only thing I will have is the people of Brazil, who elected me as President.

That is why I have taken on a commitment: to wake up every morning more optimistic than when I went to bed the previous evening; to believe every day that nothing is impossible. We can change anything, if we believe in ourselves and what we are doing. Let's stop being pessimistic, and let's stop thinking that someone is going to do things for us that we actually need to do ourselves. We have governmental concerns, and we have business interests - interests shared by businesspeople in Europe, Mercosul, South America and Latin America. What we need to decide, with great objectivity, is what we want to build, and then build it together.

President Aznar has brought us a project that shows he is not just thinking of the next election in Spain - indeed, he told me he is not actually going to be a candidate. His proposal is the proposal of someone who is managing to think of future generations. That's the huge difference - between a person who thinks about an election and a person who thinks about the next generation. I don't want to govern thinking only about my term as President: I want to think about the Brazilian children who are too young to understand who we are and why we are in politics.

I wish you good luck, and I hope this Forum has been enlightening for everyone present. When it comes to any issue that depends on the government, you can be quite sure that our doors will not be closed. They will always be open in order to consolidate the bond between Mercosul and the European Union.

Hotel Blue Tree in Brasília on 29th October 2003
photo: Weimar Pettengill