The Trade Agreement between Mercosur and the European Union and its benefits
to Brazil
Since its formation, the European Union (EU) has maintained close ties with Brazil, both in the political-diplomatic and commercial fields, since the bloc is currently the second largest trading partner in the country. Even so, cooperation between the two tends to increase even more with the new trade agreement between Mercosur and the EU, which expands the relationship between the markets of the two blocs and can be extremely beneficial, especially for Brazilian trade.
The agreement between the blocks and their perspectives
Negotiated for over 20 years, the agreement signed in 2019 provides for the elimination of import tariffs for more than 90% of products traded between the blocks. At the same time, according to the National Industry Conference, it will be able to eliminate tariffs on 68% of the 1101 products exported from Brazil to the EU, which, should it occur, will make Brazilian goods more competitive on European soil.
As a result, the agreement is expected to be beneficial to Brazil both commercially and multilaterally. In the first one, it is highlighted that, according to estimates by the Ministry of Economy, there could be an increase in the Brazilian GDP of more than US$ 87.5 billion, reaching US$ 125 billion depending on the performance of Brazil in the 15 years of operation. Meanwhile, expectations for foreign investment in the country in this period are around US$ 113 billion, while exports to the EU are estimated to reach US$ 100 billion by 2035. In addition, it is important to emphasize an increase in southern multilateralism -American by Mercosur, which gains great credibility with this agreement and opens doors for new businesses and investments in the future.
However, some impasses have been preventing the ratification of the agreement (although it has already been signed), in particular the Brazilian environmental issue and some inequalities that may be generated between the blocks if it is implemented. Even so, the Brazilian chancellor, Carlos Alberto França, stated that the agreement could enter into force until the end of 2022.
The importance of consulting in the internationalization process
Therefore, this agreement has great potential for both blocs to expand their trade relations and one of the main beneficiaries may be Brazil, with its most competitive products within Europe. However, for a business owner to know how and where to invest in this market that opens up new possibilities, it is essential to guide an international consultancy capable of making their investments assertive abroad, with, for example, a Market Identification, indicating where they should do it. your efforts.
By Enzo Toledo on 06/08/2021
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