The EU-Brazil partnership revolves on shared values of democracy, rule of law, human rights and economic development. There are, however, core strategic interests between the two.
EU recognizes that in post-9/11 world has witnessed a change in the ‘gravitational axis’ of power from the North to the South.1 The forging of relationship with ‘emerging economies’ not only offer attractive opportunities for EU in terms of trade and investment, they are also important partners to in a multi-polar world. It was important to engage with emerging economies to face new global threats like climate change and terrorism. This can be determined by the fact that EU has strategic partnership with all the BRICS (Brazil, Russia, India, China and South Africa) countries. The EU-Brazil Strategic Partnership was recognition by European Union of Brazil’s status as an emerging power.
One of the explicit aims of EU-Brazil relations is the motivation of EU to get leverage in Latin America through Brazil and also promote stability in Latin America by aligning with a democratic country like Brazil. Brazil is the largest economy of Latin America. Brazil is also in the forefront in the efforts to forge regional architecture in form of Mercosur and UNASUR. Brazil represents 70 per cent of GDP and 80 per cent of population of Mercosur.2 Owing to its economic and demographic weight, Brazil is a natural leader in South America or as European Commission stated a “quasi-continent”.3 The EU hoped EU-Mercosur agreement- which started in 1999 and was stalled in 2004 after the failure of Doha Development Round and was later restarted in 2010 at the initiative of EU’s Spanish presidency- would gain momentum with Brazil’s help especially after Venezuela became the member of the bloc in 2012. Hence, Brazil was a valued partner for EU in the region. Moreover, Brazilian influence in Latin America is considered as a balancing narrative against Bolivarian Socialism of countries like Venezuela.4
EU perceives Brazil as highly active member in international and multilateral institutions and therefore a worthy ally in multipolar world. Multilateralism forms the cornerstone of Brazilian foreign policy.5 Multilateralism is an important tool for Brazil to project itself on the international scene and multilateralism plays a critical functional role in Brazilian foreign policy. Firstly, through Multilateralism, Brazil aims to maintain its autonomy in foreign policy. Engaging in multilateral forums of various forms like South-South coalitions like BRICS, regional blocs like Mercosur and Unasur and bilateral co-operation with EU, provides diversity of international partners to Brazil such that it can maintain its autonomy and not be forced to align itself with a selected group.
Secondly, owing to the rise of emerging economies coupled with the financial crisis that hit Europe and United States, Brazil has learnt that there is enough room for South-South co-operation in international space.6 Through South-South co-operation, Brazil can align itself with countries of similar attributes so as to balance and challenge the asymmetries embedded in international institutions as well as in North-South co-operation. Therefore, forums like IBSA have become an important platform for Brazil to discuss issues affecting world order with likeminded countries like India and South Africa. Brazil has been proactive in forums like G 20 to address the financial crises and has been proactive in protecting the interest of developing countries in WTO.
Thirdly, engagement in bilateral and multilateral forums also brings in tangible benefits in terms of access to foreign markets and investment.7 In this respect Brazil’s relations with EU were expected to increase economic activity between EU and Brazil as well as Brazil and EU member states.
Energy security and sustainable development both are interconnected areas of Brazil-EU relations. Brazil is self-sufficient country when it comes to oil. Whereas, economic growth of India and China will spurt their consumption of fossil fuels and thereby both these countries will compete with the EU for oil imports from Middle East, Russia and Africa, Brazil’s economic growth is unlikely to lead to such a competition with EU.8 Similarly, Brazil is a leading producer of bio-fuels and hence a great source for EU to move to a low carbon economy. EU’s Renewable Energy Directive 2009 promotes the use of bio-fuels as by the year 2020, 20 per cent of energy used by the EU and 10 per cent of EU member states transport fuel must come from renewables.9 Brazil is the second largest producer of bio-fuels after United States and one of the leading exporters of bio-fuels.10 The share of bio-fuels energy in road transport in Brazil is 20 per cent, much ahead of any other country.11 Hence, EU and Brazil are natural partners in the area of bio-fuels production and technology. Brazil’s energy matrix consists of hydropower and bio-fuels providing 45 per cent of energy, yet owing to emissions from agriculture, forestry and land use activity, Brazil is third largest emitter in the world.12 Brazil’s co-operation is also important in forging an effective regime to control climate change. Deforestation threatened the Amazon Forests in Brazil with 20,000 km2 of rainforests were being lost annually, and hence conservation of the Amazon was one of the key priorities of EU-Brazil strategic partnership.13
The diplomatic relations between European Union and Brazil were established during the 1960, but in concrete terms the legal basis for the relations was laid down in 1992 with the Framework Agreement for Co-operation between European Economic Community and Federal Republic of Brazil. The Framework Agreement is a comprehensive broad based agreement document comprising of 35 Articles encompassing many fields of co-operation. Other two treaties that formed the basis of EU-Brazil relations are the Science and Technology Co-operation Agreement signed in 2005 and the EU-Mercosur agreement signed for inter-regional co-operation in 1995. However despite these agreements, the relations between Brazil and European Union did not make any substantial progress during the 1990’s. While EU was busy constructing a monetary union, Brazil was mired in its own internal political and economic troubles.15 President Cardoso tried to forge a relationship with EU as a part of his broader foreign policy of supporting existing international regimes and multilateral institutions. Yet co-operation was limited as European Union was more interested in inter-regionalism based co-operation in form of EU-Mercosur. The relations gained momentum during Luiz Inacio Lula da Silva’s presidency in 2003. In 2005, Scientific and Technological Agreement was signed, while in 2007 the EU-Brazil relations were institutionalized into EU-Brazil Strategic Partnership during the 1st EU-Brazil Summit in Lisbon in 2007 during the EU’s Portuguese presidency.
The first European Union and Brazil Summit held in Lisbon was important step in EU-Brazil relations as it forged the EU-Brazil Strategic Partnership. In the second summit in Rio de Janeiro, first Joint Action Plan was signed that envisaged the thematic areas of co-operation between EU and Brazil. The five thematic areas of co-operation between EU and Brazil are:16
These areas have remained constant even in the Second Joint Action Plan signed in 2011 during the fifth EU-Brazil Summit in Brussels. Primarily EU-Brazil relations have broadly focused on promoting effective multilateralism, trade, aiding energy security, co-operating on issues of climate change and sustainable development, fostering economic development and poverty eradication, supporting inter-regional co-operation particularly between EU-Mercosur and promoting human rights.
The summit concentrated substantially on three areas of co-operation: Economic growth, job creation and competitiveness; Foreign Policy and Tackling Global Challenges. These are certain significant points that came out in the Joint Statement:
There are three aspects of EU-Brazil relations; bilateral aspect, the EU-Mercosur aspect and increasingly after the financial crises there is the aspect of global economic governance. In terms of bilateral trade and investment, Brazil and EU have enjoyed substantial progress in their relationship. Brazil being the largest economy in Latin America, accounts for 34 per cent EU’s trade with the region.25 In 2012, Brazil was EU’s 8th trading, while EU was the number one trading partner of Brazil.26 EU has 238.9 billion investment stocks in Brazil as per the 2011 statistics, which represents 53 per cent of total investment stock of EU in Latin America.27
Trade in Goods | Trade In Services | |
EU’s Exports to Brazil | € 39.6 billion | € 12.7 billion |
EU’s Imports from Brazil | € 37.3 billion | € 7 billion |
Trade Balance | € 2.4 billion | € 5.7 billion |
Source: http://ec.europa.eu/trade/policy/countries-and-regions/countries/brazil/
Brazil mainly exports agricultural and primary goods to EU and it is the largest single exporter of agricultural products to EU.28 Agricultural products form 44 per cent of Brazil’s export to EU and mining products account for 28 per cent of exports to EU. EU’s exports to Brazil mainly consist of manufactured goods like machinery, transport equipment and chemicals.29
In the aftermath of financial crises, both EU and Brazil have supported the G 20 framework for growth in Washington Summit of 2008.Brazil has been committed to G-20, as it views as an important multilateral forum where developing countries can interact with the G-8, while at the same time it is a much more representative of the contemporary global order. Former Brazilian President Lula praised the 2008 summit in Washington saying that “we are talking about G-20 because the G-8 does not have any more reason to exist”.30 Brazil has been urging BRICS, IBSA and G-20 to take up stronger role in solving European financial crisis.31
Another important element of EU-Brazil relationship is the EU-Mercosur comprehensive trade agreement. Earlier, EU was more keen on inter-regional co-operation with Mercosur, however limited progress EU-Mercosur relations prompted EU to seek a bilateral co-operation with Brazil in order to use its regional influence to gain some momentum in EU-Mercosur trade agreement. In terms of trade statistics, EU accounts for 20 per cent of Mercosur’s total trade making it the first trading partner, while Mercosur is the 8th trading partner of EU accounting for 3 per cent of EU’s trade.32 Like Brazil, Mercosur countries exports to EU are dominated by agricultural products and raw materials (68 per cent of exports) whereas EU exports manufactured goods and transport equipment to Mercosur countries.33 The EU is also a major exporter of commercial services to Mercosur (€16 billion in 2011), as well as the biggest foreign investor in the region with a stock of foreign direct investment that has steadily increased over the past years and which amounted to €286 billion in 2011.34 These numbers have to be viewed in the context that Mercosur is economically dominated by Brazil. However, EU-Mercosur have failed to sign a comprehensive trade agreement which is going to be a part of the bi-regional Association Agreement. The progress on EU-Brazil trade agreement has been a major impediment in the deepening of EU-Brazil relations.
Energy and sustainable development are the building blocks of relationship between EU and Brazil. Co-operation in field of biofuels production form the basis of energy relations between the two partners. Brazil’s leading producer of biofuels and its long tradition in biofuel production has enhanced the technological capability to produce biofuels. EU perceives renewables as an important for meeting climate change objectives and augmenting energy security. Therefore, there are shared interest in promoting biofuels trade and collaborations in field of biofuel research. The European Investment Bank (EIB) has extended €500 million loan to BNDES for renewable energy related projects.35 There has been joint project funded by the Seventh Framework Program (FP7) like SUNLIBB (Sustainable Liquid Biofuels from Biomass Bio-refining) Project that aim at combining the European and Brazilian research strengths in order to facilitate cost-competitive first and second generation bio-fuels.36 European companies like British Petroleum and Royal Dutch Shell have also invested in Brazil’s biofuels sector. As a part of triangular co-operation between EU, Brazil and African countries, EU and Brazil signed an agreement with Mozambique to develop biofuels and bioelectricity.37
Sustainable development envisages co-operation in the field of curbing deforestation of Amazon and fostering effective global climate change regime. The conservation of Amazon forests has been one of the most important aspects of environment co-operation between the two partners as highlighted by the European Commission’s Country Strategy Paper (2007-2013) for Brazil.38 Brazilian government aims to cut the annual rate deforestation by 70 per cent by 2017.39 Brazil established Amazon Fund in 2008 to raise donations that promote conservation of Amazon forest. Germany became the first EU country to contribute to the fund by donation €21 million.40 Norway (Non-EU Country) has contributed €300 million to this fund in 2011 with a potential of raising it to €1 billion by 2015.
Brazil is the third largest emitter of Greenhouse gas (GHG) in the world.41 However, among the developing countries it has the most stringent national climate change mitigation targets and Brazil has been fairly active on the issue of climate change in international forums.42 Bilaterally, EU and Brazil partnership on environmental issues has two objectives, firstly, to exchange experiences of domestic climate change experiences and secondly, to collaborate in international negotiations on climate change. Both the partners launched the EU-Brazil Climate Change Dialogue in Brussels summit in 2011, adding senior and ministerial level talks to the already existing technical level.43 Apart from that, Brazil has significant portfolio of Clean Development Mechanisms with EU Member States like United Kingdom and Germany.44 The objective of collaborating on international negotiations received a boost in 2011 Durban conference on climate change. After the disappointments of the Copenhagen and Cancun conferences (2009 and 2011 respectively), where Brazil stood in solidarity with the BASIC group refusing to sign legally binding agreements, in Durban, Brazil finally broke ranks with the BASIC declaring their willingness to sign an EU roadmap to a new climate deal with a commitment to some kind of legally binding targets.45
EU and Brazil have short-term visa waiver agreement for diplomatic, service and ordinary passport holders. Brazil and European Atom Energy Community have signed Agreement of Co-operation in the field fusion energy research. There has been considerable progress on matters of civil aviation and maritime cooperation. Overall there are 20 areas on which regular EU-Brazil Dialogues take place.46
Even though the economic relations between Brazil and EU are worthy, there have been some fundamental differences between both partners. EU has been a vocal arraigner of Brazil’s protectionist trade practices. According to latest reports by European Commission on Potentially Restrictive Trade Measures, Brazil is among the countries that have resorted to the highest number of new potentially trade-restrictive measures.47 EU complains about the high tariff rates applied by Brazil that average to 12 per cent.48 The EU has filed a complaint against Brazil at the WTO against 30 per cent import tax levied by Brazil on cars and other electronic products.49 The subsidies given to farmers under EU’s Common Agricultural Policy have hindered agro-product exports from Brazil. Moreover, EU’s resistance with relation to agricultural trade liberalization has impeded in Brazil from fully accruing the benefits in bio-fuel sector.50 The high tariff imposed by the EU on ethanol imports point out to EU’s intention of controlling cheap imports and protecting domestic producers.51 The strict non-tariff barriers like the sustainability criteria demanded by the EU on biofuels producers has hampered Brazilian exports.52 One of the reasons for EU-Mercosur negotiations being in doldrums has been due to failure to resolve relating to agricultural trade as Mercosur countries are also leading agricultural exporters. The co-operation on the issue of deforestation has been limited due to under-investment by EU. While Germany (EU Member State) donated €21 million to the Amazon Fund, Norway (Non-EU Country) has contributed €300 million to this fund in 2011 with a potential to increase it to €1 billion.53
Secondly, EU and Brazil can work together on issue of internet governance related issues. The strong positions both partners have taken against US National Security Service surveillance points at the commonality of viewpoint between Rio de Janeiro and Brussels. The recent paper published by European Commission, called “Europe’s role in shaping the future of Internet governance” calls for an international group to replace the California-based Internet Corporation for Assigned Names and Numbers (ICANN).57 Brazil will be hosting the Global Multi-stakeholder Meeting on the Future of Internet Governance in São Paulo in 2014; hence both partners can co-operate to effectively bring about change in internet governance.
Thirdly, there is substantial scope for co-operation “triangular co-operation” in developing world, particularly Africa. EU is one of the biggest donors of development aid and Brazil has in recent years become an aid giving country. In 2010, Brazil’s aid expenditure was $1 billion.58 Brazil has contributed monetary and technical aid to around 58 countries, half of which are in Africa.59 Brazil’s belief that democracy, security, human rights and development are interdependent is quite close to EU’s development thinking. At a time when both EU and Brazil are going through economic downturn, it makes sense for them to pool resources on specific projects in Africa. Till now the progress on triangular co-operation has been slow with only two projects being launched.60 Yet, as a result of budget cuts and austerity measures following sovereign debt crises may force EU to increase engagement on triangular co-operation.
The outcome of 7th EU-Brazil summit was labeled disappointing by some commentators. Even though the outcome of EU-Brazil summit was modest, it was significant given the context in which the summit was held. Firstly, both EU and Brazil are facing their own socio-economic challenges. While EU’s recovery from the sovereign debt crisis is still fragile, Brazil has witnessed economic stagnation with growth rate of 1.6 per cent. Like other emerging economies, Brazil is also facing ‘middle life crises’. There have also been many protests in Brazil against the government. Secondly, EU and Brazil are distracted by events occurring in their respective neighborhoods. The Ukraine crisis has taken over EU’s foreign policy priorities, while protests against President Maduro in Venezuela are of concern to Brazil. Despite these limitations some very crucial points emerged in the EU-Brazil Summit. If both the partners can concentrate on issue based co-operation, namely: EU-Mercosur agreement, Internet Governance and triangular co-operation with third countries, they can enhance their relationship. Such a co-operation will not only bring both partners closer but will strengthen their normative compatibility.