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Global insider: Brazil-EU relations

World Politics Review | 30 Aug 2010

Global Insider: Brazil-EU Relations

Kari Lipschutz

Brazilian President Luiz Inacio Lula da Silva, European Commission President Jose Manuel Barroso, and President of the European Council Herman Van Rompuy met at a summit in Brasilia in July to discuss the development of bilateral and regional ties. In an e-mail interview, Dr. Mahrukh Doctor, lecturer in political economy at the University of Hull and visiting associate professor at Johns Hopkins School of Advanced International Studies, discusses Brazil-EU relations.

WPR: What issues are driving the current relationship between Brazil and EU?

Mahrukh Doctor: The key drivers of Brazil and EU relations are trade and investment. Brazil is the largest market for EU exports (€26.3 billion at its peak in 2008) and FDI in Latin America (€25.6 billion net in 2006-2009). Just less than a quarter of Brazilian exports are destined for the EU (€35.9 billion in 2008) and Brazilian FDI in the EU has grown in recent years (€39.7 billion net in 2006-2009). Moreover, these healthy economic links gain depth from shared strategic priorities and an emphasis on pursuing multilateral approaches to dealing with key global issues such as climate change, peace and security, sustainable development and global financial system regulation.

WPR: What is the balance between Brazil’s bilateral relations with EU member states, and inter-regional relations between Mercosur and the EU?

Doctor: First it is important to note that the special status of bilateral relations is formalized in the EU-Brazil Strategic Partnership Agreement signed in 2007. However, the recent relaunch of negotiations to sign an EU-Mercosur Association Agreement, including a free trade agreement, will color bilateral relations. Although the talks are unlikely to result in a substantive agreement in the short run, it certainly provides a distracting element in terms of deepening Brazil-EU economic ties.

In my opinion, both Brazil and the EU find themselves in a bit of a fix on the question of accommodating Mercosur within their bilateral relations. For Brazil, Mercosur is most important as a forum for addressing regional political and security issues, but has diminishing economic value as it is increasingly seen as an obstacle to signing trade and investment agreements with third parties. However, Brazil finds it extremely difficult to move away from its economic commitments to a Mercosur customs union and a common external tariff. For the EU, strategic interests and pro-integration values make it desirable to deal with Mercosur as a bloc, although it recognizes that foot-draggging by some Mercosur members makes it extremely difficult to move forward collectively. It is not surprising that EU economic interests have looked elsewhere for new agreements.

WPR: What are the potential issues of increased cooperation and/or conflict between Brazil and the EU?

Doctor: The EU-Brazil Strategic Partnership Agreement and the Brazil-EU Joint Action Plan (adopted in 2008) lay out a number of areas of cooperation ranging from issues of global importance such as climate change, sustainable development, combating organized crime (illegal drugs and human trafficking), and international financial market regulation to more localized dialogues on issues such as sanitary and phytosanitary issues, education and cultural policies, science and technology, and migration.

There is a generally positive climate of cooperation between both sides, however there are some entrenched conflicts arising from thorny issues where they have taken opposing stances and have divergent interests at stake: agriculture trade protection, biofuels and alternate energy development, climate change and environment policy (especially deforestation), and food security are likely to be at the forefront of disagreements in their bilateral relations.

 source: World Politics Review