Mercosur and European Union agreement is an opportunity for Brazil to diversify exports

“The agreement with the European Union would be the most important thing Mercosur could do. First, because of the opportunity to attract investment. By attracting investment, you have a very interesting effect, which is intra-company trade of parts and pieces, assembly of products. This could help a lot in the industrialization of the region. Secondly, because the European Union is a demanding market, which has many technical and sanitary requirements, where you improve the competitiveness of the Brazilian industry”, he evaluates.

As commodities agricultural products and minerals have gained more and more space in the Brazilian export basket. According to the Ministry of Development, Industry and Commerce (MDIC), soybeans, crude oils and iron ore represented 35.7% of the country’s exports in 2022. This means that only three items were responsible for more than a third of foreign sales from Brazil.

Last year, Brazilian exports to the 27 countries of the European Union totaled US$ 50.9 billion. Almost 50% of everything Europeans imported from Brazil originated in the Brazilian manufacturing industry. By way of comparison, only 22% of Brazil’s sales to China – the country’s largest trading partner – corresponded to items produced by the manufacturing industry.

Unlike what happens in the relationship with the Chinese, sales from Brazil to the EU have a significant participation of the industry. The expectation is that, once trade between Brazilians and Europeans is facilitated, industrial goods will remain in the spotlight, which will be positive for the national sector.

This is a bet by the National Confederation of Industry (CNI) itself. According to the entity’s president, Robson Braga de Andrade, the entry into force of the agreement with the European Union “will be an important contribution to the reindustrialization of the country, without which our economy will continue indefinitely in a cycle of stagnation or low growth”.

A CNI survey shows that the free trade agreement between Mercosur and the European Union should benefit around 2,800 industrial products sold by Brazil to European countries. Once the partnership takes effect, four out of ten industrial goods exported by the country would have zero tariffs when entering Europe.

Diversification

Senator Nelsinho Trad (PSD-MS), president of the Senate Commission on Brazilian Representation in the Mercosur Parliament, points out that, contrary to what is propagated, Brazilian agribusiness will not be the only one to win if negotiations between Europeans and the South -Americans reach a happy ending.

“I think so (it’s a way to diversify our exports), because a virtuous chain is formed from the moment you stimulate the issue of agribusiness and the issue of industry. One pulls the other. I see a very positive horizon so that we can once and for all promote social development with job and income generation”, he points out.

Brazil is engaged in concluding the agreement between Mercosur and the European Union, says minister