The EU-Mercosur Agreement: A Story with a Happy Ending?
EU-Mercosur Trade Agreement: Opportunities and Challenges EU-Mercosur Trade Agreement: Opportunities and Challenges The trade agreement between the EU and Mercosur states could be advantageous for both sides, eliminating high import tariffs. However, the ratification of the document is at risk. Efforts for the EU-Mercosur trade deal span over two decades. A Milestone in Trade Negotiations After nearly 20 years of negotiation, the European Union and Mercosur states — Brazil, Argentina, Uruguay, and Paraguay — reached a political agreement in June. This “agreement in principle” aims to foster growth and job opportunities on both sides. However, ratification remains uncertain, as several nations have expressed reluctance to sign the deal. The Economic Importance of the Agreement The EU is Mercosur’s largest trade and investment partner, exporting €45 billion in goods in 2018 and €23 billion in services in 2017. Additionally, the EU holds a €381 billion foreign investment stock in Mercosur. For the EU, eliminating trade barriers, particularly for smaller companies, is a key objective. The agreement could remove tariffs on 91% of EU products, saving up to €4 billion annually. For instance: Cars: current tariff of 35% Machinery: tariffs between 14% and 20% Chemicals: tariffs up to 18% Challenges to Ratification Despite its benefits, the agreement faces significant resistance: Amazon Rainforest Fires: France and Ireland threatened to veto the deal unless Brazil commits to stronger environmental protections. Austria: A parliamentary subcommittee voted against ratification, with four out of five parties opposing the agreement. EU Farmers: The COPA-COGECA organization has raised concerns about competition from Mercosur agricultural exports. Brazil’s Environmental Policies: President Jair Bolsonaro’s stance on the Paris Climate Agreement and limited efforts to curb Amazon deforestation have drawn criticism. Argentina: Newly elected President Alberto Fernández has expressed interest in renegotiating parts of the agreement. Given these obstacles, the future of the EU-Mercosur agreement remains uncertain. If you would like information on doing business in Brazil or wish to speak with one of our business consultants, fill out the contact form on our website or contact us by message or phone.
First Steps to Establish Business Operations in Brazil
Setting Up Business Operations in Brazil Setting Up Business Operations in Brazil Panoramic view of Sao Paulo, Brazil Brazil is considered one of the most interesting economies globally. At the same time, business leaders face a complex and bureaucratic system when establishing operations in the country. Learn more about how to set up business operations in Brazil. The Brazilian Economy: Opportunities and Challenges The Brazilian economy is considered one of the most attractive for foreign investments today, especially compared to other emerging countries. Brazil is the main economic presence in Latin America and the 8th largest economy in the world. With Jair Bolsonaro’s government, there is a promise of a more open and business-friendly economy aiming to be among the top 50 countries to do business by 2022. However, investors must navigate challenges, such as a complex tax system and the preference of Brazilian companies for working with local entities for tax reasons. Four Main Ways to Do Business in Brazil Depending on your business purpose and planned commitment, here are the main approaches for foreign investors and companies: 1. The Business Development Agent Objective: Local support to analyze the Brazilian market or find potential business partners or suppliers in Brazil. Solution: Hire a local business development agent. This avoids visa issues for non-residents while providing insights and connections. 2. The Sales Representative Objective: Find Brazilian customers for goods, services, or software. Solution: Hire one or more Brazilian sales representatives. They identify potential customers, sign contracts (if authorized), and keep you informed about market developments. It’s important to draft a commercial representation agreement that complies with Brazilian law to protect both parties’ interests. 3. The Distributor Objective: Work with a partner who intermediates transactions and handles product distribution to end customers. Solution: Partner with a Brazilian distributor. Unlike sales representatives, distributors purchase products before reselling them and typically hold import licenses. 4. Incorporate a Brazilian Subsidiary Objective: Long-term commitment and building a Brazilian brand. Solution: Incorporate a subsidiary. This allows for better control over operations, provides tax advantages, and signals a commitment to the Brazilian market. If you need more information or wish to speak with one of our business consultants, fill out the contact form on our website or contact us by message or phone.