Brazil and Europe working together

BRAZIL AND THE EUROPEAN UNION WORKING TOGETHER

Table 1 – Brazil/EU Comparison

Brazil European Union
Population 201 million (2014, estimate) 503 million (7% of the world’s population)
GDP € 1,613 trillion (2014, estimate) € 12,9 trillion (2012)
GDP Growth 2,3 % (2014) 0,1% (2013)
GDP Growth 1,79% (2014, estimate) 1,4% (UE-28, 2014, estimate)
GDP per capita € 8.100 (2013, estimate) € 25.088 (2013)
Unemployment 6,2% (2013) 12% (UE-28, 2014)
Currency Real (R$ / BRL) Euro (€ / UE-18)
President Dilma Rousseff (2010-2014) Herman Van Rompuy, President of the European Council
Area 8,515 million km² 4 million km²
Capital Brasília (Distrito Federal) Brussels (Belgium)
Biggest City São Paulo (19,9 million / 1,522 km²) France as the largest Member State, and Malta as the smallest
Upcoming Events Rio de Janeiro Summer Olympics 2016

Source: BANCO CENTRAL DO BRASIL; INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA (IBGE)

BRAZIL, MERCOSUR, AND THE NEGOTIATIONS WITH THE EU FOR AN ASSOCIATION AGREEMENT

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The Common Market of the South (Mercosur) was founded in 1991 by the Treaty of Asuncion, which provided for the progressive establishment of a common market and a customs union. Mercosur unites Argentina, Brazil, Paraguay, Uruguay, and most recently Venezuela, which officially joined in July 2012. Bolivia is in the process of becoming a full member while Chile, Colombia, Ecuador and Peru are associated. Brazil represents over 70% of Mercosur’s GDP and 80% of its population.

Mercosur is the fourth largest economic grouping in the world (after the EU, NAFTA and ASEAN). The total GDP of the region reaches €1800 billion, more than South Korea, India or Russia. The average annual GDP growth in the block exceeded 5% over the past 7 years. In terms of EU exports, Mercosur ranks on par with India and ahead of both Canada and Korea. EU investments in Mercosur amount to more than €285 billion in 2012, more than EU investments in China, India and Russia combined.

The EU is currently negotiating with Mercosur for an Association Agreement. Talks started in 2000 and, although suspended in 2004, the process was re-launched in May 2010 at the EU-LAC summit. Nine rounds of negotiations have been held since then, most recently in October 2012. At the Ministerial meeting held in Santiago de Chile on 26 January 2013, the EU and Mercosur countries agreed that the next step in the negotiations would be an exchange of market access offers on goods, service establishment and government procurement. This would be the first exchange since 2004.

STRATEGIC PARTNERSHIP BETWEEN BRAZIL AND THE EUROPEAN UNION

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Diplomatic missions of the 1960’s evolved into a strategic Brazil-EU partnership signed in 2007 when annual summits began to address global challenges such as climate change, financial crises and most importantly bi-lateral trade. More than thirty sectoral dialogues were created and now a second joint Brazil-EU plan of action is under way.

Brazil is the most important market for the EU in Latin America and is a key country in Mercosur; in its turn, the EU bloc is a main trade partner and investor for Brazil, ahead of both China and the United States. Recent numbers on Brazil-EU trade indicate a slight rise in exports from EU to Brazil, from €39.7 billion in 2012 to €40.1 billion in 2013.

The EU recorded for the first time in 2012, a surplus in its trade with Brazil nearing to € 2.3 billion (in 2011, it had a deficit of € 3.3 billion). This surplus rose to € 7.1 billion in 2013 due to a decrease in Brazilian exports to the EU.

SECTORAL DIALOGUES

The sectoral dialogues are a new dynamic of cooperation between the European Union (EU) and emerging countries. Currently, thirty dialogues exist between Brazil and the EU on various areas. These dialogues work based on the principles of reciprocity and mutual appreciation, pursuing the exchange of expertise and experience in areas of joint interest.

The project “Support to the EU-Brazil Sector Dialogues” is aimed at ensuring the smooth continuation of the strategic Brazil-EU partnership through the exchange of technical expertise, jointly coordinated by the Ministry of Planning, Budget and Administration (MP) and by the Delegation of The European Union in Brazil (DELBRA).

The exchange of expertise and experience which constitute the thirty Sectoral Dialogues is focused in four priorities.

Table 2 – Main Brazil-EU Sectoral Dialogues

Rural and Agricultural Development
Brazilian Institutions Ministry of Agriculture, Livestock and Supply, Espaço AGRO BRASIL, CNI, CNA, APEX-Brasil and the Brazilian Mission to the European Union
European Institutions General Administration for Agriculture and Rural Development
Air Transport
Brazilian Institutions National Civil Aviation Agency
European Institutions Agência Europeia para a Segurança da Aviação Direção-Geral para Mobilidade e Transportes
Mechanism for bi-lateral consultations on sanitary and phytosanitary issues.
Brazilian Institutions National Agency of Sanitary Vigilance, the Ministry of Agriculture, Livestock and Supply and the Ministry of Foreign Affairs
European Institutions General Administration of Consumer Health and the General Administration of Commerce
Spatial Cooperation
Brazilian Institutions National Institution of Space research and the Ministry of Technical Science and Innovation
European Institutions European Space Agency and the General Administration of Enterprise and Industry

Source: Ministério do Planejamento

EU-BRAZIL BUSINESS SUMMITS
EU-BRAZIL SUMMITS
A FEW EUROPEAN POLICIES OF INTEREST TO BRAZIL

Roberto Stuckert Filho PR

Common Agricultural Policy (CAP) – Having started on the first day of 2014 and for the next six years (2020), the new CAP will have a budget of around € 373.2 billion.The new rules regarding direct payments (‘green’ payments, support to young farmers, etc.) will enter into force in 2015.

For the first time the European Council and the European Parliament negotiated the details of the new CAP as co-legislators (with identical competences), divided in to four legislative proposals. These include direct payments to farmers, the common organisation of the market, rural development and the regulation of the finances, management and accompanying of the new CAP in between 2014 and 2020.

Among the innovations brought forth by the CAP, each farmer will have the right to a direct payment per hectare should he respect ecological agricultural practices beneficial to the environment (‘greening’). Around 30% of Member States’ contributions will serve this purpose.

Experts predict that France and Germany will increase their sugar production and decrease imports.

The reform of the sugar sector within the CAP, which ends the system of quotas, will be the biggest problem for Brazil as of 2017.
The distortions of the market still remain as subsidies to large producers will decrease by only 5%. Products such as grain, rice, sugar, beef, pork and poultry, milk and lactose derivatives as well as processed products (with the exception of processed bovine meat and poultry) will also be subsidised.

With regards to governance, legislation now obligates disclosure of the beneficiaries of the CAP, allowing European citizens access to the way in which public funds are spent.

Source: Conselho da União Europeia

Trade Policy

- The 28 member States delegate the running of the common trade policy to the European Commission as well as trade with third countries.

- The Treaty of Lisbon (2009) paved the way for foreign direct investment (FDI).

- The agenda for the 2010-2015 trade policy focuses on reducing barriers to trade, opening global markets and relying on trade as a motor for economic growth and the creation of jobs.

In October 2013, the European Parliament (EP) approved a proposal that aims to bestow on the EU the right to suspend or remove concessions and other planned obligations in the scope of commercial agreements.The aim of this is to: a) respond to third country violations of rules of international commerce affecting the interests of the EU; and b) to rebalance concessions or other obligations relating to international relations with third countries, if the conceded practice regarding EU goods is altered during the importation.

In this way, the European Commission (EC) will be able to reduce bureaucracy when certain necessities arise.These include the need to suspend concessions on tariffs, to create customs rights, to impose or amplify restrictions on import and export quotas, to cease concessions in public contracts when controversies occur or external means of safeguarding by countries which limit the EU’s commerce.

Research and Innovation (R&I)

Horizon 2020, the EU’s Research & Innovation Programme, which has € 80 billion in financing for 2014-2020, will be open to researchers from around the world.For Brazil, the partnership will require a joint financial expenditure. In the next two years, around € 15 billion will be paid out to sectors such as healthcare, digital security and intelligent cities.

The € 7.8 billion allocated in 2014 to R&I will finance projects in three main areas: scientific excellence, industrial leadership and societal challenges.

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Brazil and Europe working together

Strategic partnership Brazil and the European Union