Mercosur-EU agreement may take a while to come out, says Brazil’s ambassador in Portugal

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The agreement between Mercosur and the European Union may take a while to be ratified, according to Raimundo Carreiro, Brazil’s ambassador in Portugal.

“Unfortunately, despite the positive milestone of concluding the negotiations in 2019 and the advanced stage of the legal review process of the agreement, there is still no clear perspective regarding when it will be possible to proceed with its signature and start the ratification process,” the ambassador said at a Lide group event in Lisbon.

Carneiro said that ratification is a complex issue that demands in-depth discussions in the European Union.

Last week, during a visit to Brazil, German Prime Minister Olaf Scholz said that the agreement is in the interest of both regions. Lula has also been talking about the need to move forward with the agreement, as in the meeting with Uruguayan President Luis Lacalle Pou, on the 25th.

O embaixador afirmou que se entrar em vigor, poderá ampliar as exportações brasileiras para a Europaem até US$ 100 bilhões em 15 anos, além de atrair investimentos da ordem de US$ 113 bilhões de dólares ao Brasil.

By 2035, the agreement could increase the Brazilian GDP by US$ 87.5 billion, a value that may rise to US$ 125 billion if indirect gains with productivity are considered.

“It would be a watershed. It is like a new opening of the ports to the global market,” said the ambassador.

New Perspectives

According to Carneiro, there are two themes that open new perspectives for the economic relations between Portugal, Brazil, and the European Union: the European bloc’s agreement with Mercosul and the change in government.

He recalled that in his inauguration speech, Lula said he intends to resume Minha Casa Minha Vida and structure a new PAC to generate jobs. For this, he intends to seek financing and expand national and international cooperation.

“This process tends to develop through partnerships with the private sector. The Federal Government’s Investment Partnerships Program has 145 projects in its portfolio. Portugal ranks as the seventh largest potential investor,” said the ambassador.

Carneiro added that current conditions are favorable for a new wave of expansion of Portuguese investment in Brazil, on par with the one that occurred in the 1990s, when the country was the gateway for the internationalization of many large companies from Portugal. “It is a natural path for Portuguese companies, given the size of the Brazilian market and the common language.”

Trade flow

The commercial exchange between Brazil and Portugal in 2022 was US$ 5.3 billion. The European country is only the 18th export destination for Brazilian products.

About 60% of Brazilian exports to Portugal correspond to fuels, and a good part is due to the internal trade of Galp, the Portuguese oil company that operates in the Santos Basin. Another 20% of exports are agricultural products, especially soybeans and corn.

For the ambassador, it is necessary to diversify the exports agenda so that the trade between the countries advances.

“The tendency is for this situation to improve in the short term, given the strategic partnership with the Portuguese in the area of aeronautical industry. In this market, Embraer stands out: in 2019, the company sold the Portuguese government five KC-390 aircraft, which should be delivered to the Portuguese air force starting in 2023, for the value of 872 million euros.”

Carneiro added that three branches are strategic and can increase the complementarity between the countries: fertilizers, renewable energies – with an emphasis on green hydrogen – and public works.

The war has accelerated Europe’s energy transition, which will need an additional 2,000 gigawatts of installed renewable energy capacity to meet decarbonization targets by 2050, the ambassador points out.

He cited a study that shows Brazil has the potential to supply almost a third of this, or 700,000 gigawatts of renewable energy.

The ambassador recalled that in April the thirteenth Brazil-Portugal Presidential Summit – the first bilateral Chamber since 2016 – will be held in Lisbon and the can boost Brazil-Portugal relations.

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