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Trade & Invest

The industry hopes for a South America agreement

Uncertainty over punitive tariffs is already eroding the earnings expectations of the first suppliers. The VDI has already appealed to politicians and, as a counter-program, called for the conclusion of a Mercosur Free Trade Agreement.

08 Jul. 2018
HMI-ID06-078ts
The industry hopes for a South America agreement (© CNI FIESC)

On the occasion of the German-Brazilian Economic Conference 2018 , organized by the Federation of German Industries in cooperation with the Confederação Nacional da Indústria (CNI) in Cologne, BDI President Dieter Kempf reminded about the negotiations for a free trade agreement with South America, in particular, with the Mercosur states (Mercado Común del Sur), of which Brazil is by far the most important. “Almost two decades after negotiations were initiated between the EU and Mercosur, both sides have to finally muster the political will to conclude an agreement.”

A framework agreement has been in place since 1999, but further negotiations have continued to stall, mainly due to disagreements over soy and meat. The discussions which had been discontinued were finally resumed in 2010. The tangible proximity of a substantial trade war with the US is breathing new life into the negotiations, since many South American countries are also affected by the US punitive tariffs. Brazil is rich in raw materials, but failed to live up to expectations of the BRIC countries (Brazil, Russia, India, China) as emerging economies. After a series of lean years, economic growth is picking up again at an estimated 2.3%. Around 1,600 German companies are currently active in Brazil.