In a landmark speech delivered at the opening of the First EU-Brazil Investment Forum in São Paulo, European Council President António Costa laid out a compelling vision for a deepening economic alliance between the European Union and Brazil. Framed against a backdrop of global uncertainty—marked by geopolitical tensions, climate challenges, and shifting trade dynamics—the address underscored not only the strength of existing ties but also the vast potential for future collaboration.

The forum, held in Brazil’s economic powerhouse, was more than symbolic—it was strategic. As Costa noted, “This is the first Forum, but it follows a very long-standing relationship between Brazil and the European Union,” recalling that the two have been strategic partners since 2007. But what made this moment historic, he emphasized, was the mutual recognition that the time has come to transform that partnership into a robust geoeconomic force.

“When the outlook is uncertain, inaction is not an option,” said Costa. “But when the foundation is solid, we just need to move forward with confidence.”

A Partnership Built on Resilience and Growth

Despite global disruptions—from the pandemic to the war in Ukraine—the EU and Brazil have maintained a resilient economic relationship. According to data cited by Costa, bilateral trade grew by 65% over the past five years, and the EU remains Brazil’s second-largest trading partner, its largest foreign investor, and the top destination for Brazilian outbound investment.

European companies account for 39% of all foreign direct investment (FDI) in Brazil, outpacing investments from the U.S., China, and other regions. Since 2020, EU FDI in Brazil has grown at an annual rate of 11%, and today, Brazil ranks as the fourth-largest recipient of EU investment globally.

“Brazil is now the fourth largest destination of EU direct investment,” Costa stated. “And reciprocally, the EU is the main destination for Brazilian investment abroad, representing 35% of Brazil’s total foreign direct investment.”

The Mercosur Agreement: A Game-Changer in the Making

At the heart of this new phase is the recently concluded EU-Mercosur trade agreement, which Costa described as “a game-changer” for both sides. The deal, finalized in December 2024 after two decades of negotiations, will create the world’s largest free-trade zone, covering over 720 million people and nearly 20% of global GDP.

“The EU-Mercosur agreement will eliminate 90% of customs tariffs,” Costa explained. “It will reinforce our regions as a geoeconomic epicenter for global trade and investment.”

According to estimates from ApexBrasil (the Brazilian Agency for Promotion of Exports and Investments), the agreement could boost Brazilian exports to Europe by 10% within four years, particularly in agriculture, manufacturing, and green technologies. Broader trade flows are projected to grow by more than 30% by 2035, offering a stabilizing influence amid rising protectionism and unilateralism.

Greening the Future Together

One of the most ambitious aspects of the agreement is its commitment to sustainability. The EU has pledged €1.8 billion through its Global Gateway strategy to support a just ecological and digital transition in Mercosur countries, with particular focus on renewable energy, low-carbon steel production, and sustainable industrial value chains.

The emphasis on green cooperation reflects shared priorities, especially as both blocs prepare to host major global summits later this year. Brazil will host COP30 in Belém , while the EU will co-host a summit with the Community of Latin American and Caribbean States (CELAC) in Colombia. These events offer opportunities to align climate policies and showcase how democratic societies can lead the way in decarbonization and biodiversity preservation.

A Message Against Isolationism

Costa’s speech was not only about economics—it was also a clear political statement. In a world increasingly defined by fragmentation and inward-looking policies, the EU and Brazil are positioning themselves as champions of multilateralism, rule-based trade, and open societies.

“Trade should be used to build bridges and prosperity—not walls and poverty,” Costa asserted.

He warned against unilateral tariff hikes and protectionist tendencies that distort markets and burden consumers. Instead, he called for renewed faith in international institutions and cooperative frameworks that uphold shared values such as territorial integrity, the rule of law, and democratic governance.

Strengthening the Middle Class Through Innovation and Integration

Beyond macroeconomic figures, Costa stressed the human dimension of this partnership. He argued that the EU-Brazil alliance must strengthen the middle class—a bulwark of social cohesion and democratic stability—by creating high-quality jobs, supporting innovation, and investing in education and public services.

“Democracy without a strong middle class, social justice, and a sustainable economy is fertile ground for populism and radicalism,” he warned.

To this end, the EU is expanding its presence in Brazil across sectors like digital transformation, clean technology, and scientific research. With academic freedom under threat in some parts of the world, Costa suggested that Brazil and the EU could jointly attract top talent and become leaders in cutting-edge innovation.

Looking Ahead: A Long-Term Vision

The First EU-Brazil Investment Forum marked more than a milestone—it signaled the beginning of a new chapter. Costa expressed optimism that the momentum would continue with a planned EU-Brazil Summit before the end of 2025, and further dialogues between public and private stakeholders.

“This first Forum strengthens our most precious common resource: mutual trust,” he concluded. “Trust from Brazil in the EU—and from the EU in Brazil.”

As the Atlantic winds continue to connect Europe and South America, the promise of a more integrated, stable, and sustainable future is no longer a distant dream—but a tangible goal being built one partnership at a time.

Source link