Brazilian and European business leaders back trade agreement between Mercosur and the EU

The National Confederation of Industry (CNI) from Brazil and the Confederation of European Business (BusinessEurope) voiced their endorsement for the pending trade agreement between Mercosur and the European Union (EU), as per a joint statement issued on Monday.

Coinciding with the European Commission President Ursula von der Leyen’s visit to Brazil, the statement from industry leaders from both blocs praised the “high-level interaction” and expressed their “resolute support” for the trade deal.

Currently, the EU awaits counter-proposals from Mercosur (comprising Brazil, Argentina, Uruguay, and Paraguay) to the environmental safeguards proposed by Europeans in the renewed negotiations for the trade pact signed in 2019, which still awaits ratification.

While the EU insists on assurances that it won’t import Mercosur goods linked to deforestation or climate change, some Mercosur members, including Brazil, are advocating renegotiations on previously agreed government purchases.

This topic is on the agenda for the meeting between Brazilian President Luiz Inácio Lula da Silva and Von der Leyen on Monday.

The joint statement emphasized that the agreement between the two blocs would pave the way for “one of the world’s largest free trade zones,” encompassing “nearly a quarter of the global economy” and “31% of global goods exports.”

Both blocs would reap “concrete benefits” from the agreement, which could contribute to achieving “climate neutrality,” as pointed out by the industrialists.

In 2022, Brazil, the biggest economy in Latin America, witnessed a record-breaking bilateral trade with the EU worth 90.5 billion euros (approx. 96.75 billion dollars), with European investments in Brazil reaching 277 billion euros.

Moreover, Brazil is the top Latin American investor in the EU, with investments totaling 132 billion euros.

However, despite “solid” trade and investment relations, both “fall short of their potential.” This “existing and prosperous relationship” faces growing “global challenges” amidst a “new wave of protectionism.”

As per the industrialists, a pact between the two blocs could “rejuvenate” bilateral trade and prevent market displacement by “other significant competitors.”

Highlighting this, the confederations pointed out that over the past two decades, the EU has slipped from being Brazil’s primary trading partner to third place, while India and South Korea have also overtaken Brazil as the largest suppliers outside the bloc.

In the face of “these concerning trends,” the agreement is deemed “more crucial than ever,” serving as a “strategic, comprehensive, and sustained response” to the downturn in imports and exports.

The industrialists expressed their “confidence” that with Sweden and Spain presiding over the European Council and Brazil overseeing Mercosur’s pro-Tempore, “substantial progress will be made towards the ratification of the agreement” within the “environmental legislation” framework.

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