Business leaders urge EU, Brazil to boost trade talks

Business leaders urge EU, Brazil to boost trade talks

Brazilian and European business leaders on Wednesday (15 July) urged their governments to accelerate talks on an ambitious trade accord, despite the eurozone crisis and opposition from European farmers.

Background

The EU and the Mercosur group of South American countries re-launched talks on 17 May aimed at creating the world’s largest trading bloc (EurActiv 18/05/10). Discussions continued in Buenos Aires from 29 June-2 July.

The two blocs held nearly five years of talks between 1999 and 2004 over establishing a free-trade zone, but failed to reach an agreement partly due to differences over agriculture.

Mercosur – Brazil, Argentina, Paraguay and Uruguay – and the 27-country EU will hold a first round of talks in July.

According to the latest Eurobarometer, exports of goods from the EU 27 to Brazil dropped to €21.6 billion in 2009 from the peak of €26.3 billion in 2008. Imports fell to €25.7 billion in 2009, down from €35.9 billion in 2008.

As a result, the EU’s trade deficit with Brazil declined from €9.6 billion in 2008 to €4.1 billion in 2009.

Eurostat notes that the slowdown in EU 27 trade with Brazil between 2008 and 2009 is in line with the general downward trend for all EU 27 external trade during the same period.

Around 90% of EU 27 exports to Brazil in 2009 was manufactured goods (cars, medicine and aircraft), while food and drink and raw materials (soy beans, oilcake, iron ore, coffee and crude oil) accounted for more than 30% of imports.

The European Union and South American trade block Mercosur in May relaunched talks that had been on hold for six years with the aim of creating the world’s largest free-trade zone, encompassing 750 million people and goods valued at 65 billion euros a year.

The initiative faces strong opposition from farmers, environmentalists and lawmakers in Europe.

“It’s been advancing very slowly. We need to speed things up,” Robson Andrade, head of Brazil’s CNI industry federation, said on the sidelines of an EU-Brazil summit in the capital Brasilia.

Warming French hearts

Farm lobbies in France and elsewhere in Europe have criticised a possible accord in recent weeks, warning that cheaper imports such as Brazilian ethanol or meat did not meet environmental or health standards and could wipe out local producers.

“The most difficult part as always is agriculture,” said Pierre-Alain De Smedt of the Belgian Business Federation.

“We want an ambitious accord. It’s important the politicians keep this in mind as they come under political pressure,” he added.

Brazil’s President Luiz Inacio Lula da Silva said he would try to persuade French President Nicolas Sarkozy in coming months to throw his support behind the deal.

“We need to warm the hearts of the French,” Lula said.

Some industry leaders talked up the benefits of a deal for European businesses struggling with the eurozone crisis.

“At a moment of crisis in Europe, it’s important to be able to count on fast growth in countries like Brazil. We will do everything we can to push authorities on both sides,” said Jorge Rocha de Matos, head of the Portuguese Industry Association.

Brazil’s economy is expected to grow by more than 7.5% this year as European countries struggle to emerge from recession and a region-wide debt crisis.

European Commission President José Manuel Barroso acknowledged negotiations would not be easy.

“We’re 27 countries, we need to gather support on many fronts, in many sectors,” Barroso said.

But the EU chief joked that if the two regions’ achievements in soccer were any indication, the outlook for a trade deal was good.

“Have you noticed that the World Cup has only been won by countries of the European Union or Mercosur? If we are able to always win the World Cup, we should be able to reach an historic accord that is as good for our economies as the EU-Mercosur deal,” Barroso said during a news conference following a meeting with Lula and EU President Herman Van Rompuy.

(EurActiv with Reuters)

Positions

Speaking at a recent event, Luigi Gambardella, founder of EUBrasil, a business association, said Brazil was certainly the best place for EU companies to invest in.

Gambardella quoted Brazilian Development Minister Miguel Jorge as saying that his country will invest seven hundred and thirty five billion dollars in the infrastructure, industry and construction sectors over the next three years.

According to Jorge, “it is now the best time to invest in the country,” Gambardella reported.

The Brazilian Central Bank has just updated the country’s perspective growth rate up to 7.3%. Brazilian industrial production is also expected to grow by 12%. In the first four months of 2010, industrial production has already increased by 18% and by the end of this year the trade surplus is expected to reach 15 billion dollars, Jorge said, according to Gambardella.

*published on EurAcitve www.euractive.com