EU, Brazil to hold high level Summit in Brasilia

José Manuel Barroso, President of the EC, and Herman van Rompuy, President of the European Council, participated in the 5th EU/Brazil Summit with Dilma Rousseff, President of Brazil, readying for a cordial hand shake (from right to left). (EC Audiovisual Services).

The European Union and Brazil are holding a bilateral Summit in Brasilia on 24 January. Already from 2007 the EU and the largest South American country have established a strategic partnership in recognition of both sides’ political and economic importance.

According to a Commission Press release, bilateral Summits are held annually and focus on key global challenges such as the maintenance of peace and security, climate change, developments in the international economy as well as the analysis of the respective regional situations. Five summits have been held so far.

In this context, the two sides will meet again at the highest level on the occasion of the 6th EU-Brazil Summit, which will be held in Brasilia on 24 January 2013. The two sides to underpin their strategic partnership have already adopted a second three-year (2012-2014) EU-Brazil joint action plan. It identified five priority areas for cooperation: peace and security through an effective multilateral system; sustainable development; regional cooperation; science, technology and innovation; people-to-people contacts and cultural exchanges.

Trade

One of the most important facets of this bilateral cooperation is trade. In spite of the crisis, trade flows between the EU and Brazil have been increasing in both directions. The EU remains Brazil’s main trading partner, accounting for 22.2% of the country’s total trade in 2010. Conversely, Brazil is the EU’s eighth (very similar level to South Korea and India) trading partner and made up around 2% of the EU’s total trade.

In the first nine months of 2012, EU exports in goods to Brazil increased compared to the same period in 2011. At the same time, imports fell, leading to a small surplus for the EU. Since 2000, the EU had always had deficits in trade in goods with Brazil. The EU is the destination number one of Brazil’s exports and imports. More than 21% of Brazil’s exports go to the EU. The EU continued to import primarily raw materials, food and drink: 70% of imports consisted of products such as soy beans, oilcake, iron ore, coffee or crude oil.

In 2011, trade in both goods and services between the EU and Brazil grew strongly. In the goods sector, EU exports to Brazil were worth € 35.7 billion, while imports grew by 17% to reach € 38.9 billion. Over 85% of EU exports to Brazil consisted of manufactured goods, such as machinery, vehicles and chemicals. At the same time, the EU exported € 11.5 billion worth of services, while the imports of services totalled € 7.1 billion.

Investments

It’s not only trade however that binds the two sides. The EU is also the biggest foreign investor in Brazil, with more than 40% of the total stock of Foreign Direct Investment (FDI) in the country: € 238 billion in 2011, more than double the EU FDI stocks in China. In 2011, EU FDI flows to Brazil totalled € 27.5 billion, while Brazilian FDI flows to the EU accounted for € 3.0 billion.

Political relations

Around 30 political dialogues have been established so far in a wide range of policy areas, including human rights, energy, climate change, environment, information society, regional development, science and technology, social policy, culture, education, air transport, economic affairs, financial services, tourism and agriculture.

A horizontal and an air safety agreement were signed at the summit in July 2010. A comprehensive air transport agreement (open-skies agreement) was initialed in March 2011, but has not yet been signed by both of the parties. The agreement would open markets, create new investment opportunities as well as improve the commercial and operational environment for carriers.

Two short-stay visa waiver agreements were signed in October 2010. The agreement for diplomatic passport holders entered into force on 1 April 2011 whereas the one for ordinary passport holders entered into force on 7 October 2012.