EU, Brazil rekindle relations with billions in investments

By Jorge Antonio Rocha

MEXICO CITY (AA) - Brazilian President Luiz Inacio Lula da Silva held talks Monday with European Commission President Ursula von der Leyen, who pledged major investments in renewable energy and anti-deforestation projects and announced a €20 million ($21.5 million) contribution by the EU to Brazil's Amazon Fund to help protect the rainforest.

Von der Leyen's visit was the first by an EU chief executive to Brazil in 10 years, an event that she and Lula celebrated.

"I am here to tell you that Europe is back too. Europe is back in Brazil. Europe is back in Latin America. Our regions are not only natural partners, but they are also partners of choice. And it is time to take our strategic partnership to the next level," said von der Leyen in her opening statement at the bilateral talks.

Von der Leyen said Europe is currently the leading investor in the Latin American region and Brazil, a trade and investment partnership that was underscored by Lula, who said the EU is Brazil's second-largest commercial partner and that trade flow may exceed $100 billion in 2023.

In that context, she announced that the EU would invest €10 billion in Latin America and the Caribbean.

Through its international investment initiative Global Gateway, the EU will invest €2 billion to support Brazil's green hydrogen production and promote energy efficiency in industry. She noted that Brazil is already a renewable energy powerhouse, producing up to 87% of its electricity from renewable sources.

In addition, von der Leyen pledged €20 million to the Amazon fund, a mechanism funded by various countries to battle deforestation in the Amazon forest, Brazil's largest biome and what some specialists have called a significant element in the battle against global warming. Major contributors to the fund include Germany, Norway, the US and recently the UK.

She also announced that Global Gateway will disburse resources to aid Lula in his goal to end deforestation by 2030.

“We have a project together of €430 million to fight deforestation and to indeed promote, which is so important, sustainable land use in the Amazon,” she added.​​​​​​​

Von der Leyen and Lula also expressed their wish to conclude a free trade agreement between the EU and the South American trade bloc MERCOSUR. The agreement has been negotiated since 1992, and in 2019, MERCOSUR and the EU signed an accord.

However, the agreement was never ratified. Reportedly, EU lawmakers were hesitant about the role of Brazil in the international agreement during then President Jair Bolsonaro's administration. The role of Bolsonaro in the deforestation and exploitation of the Amazon pushed the EU to halt implementation of the trade pact.

The agreement would foster trade, development, investment, finance and technology cooperation, and as von der Leyen expressed in her visit, it would mean the "reindustrialization of Brazil."

Although the agreement looks closer to finally being finalized under Lula's administration, a recent proposal approved by the European Parliament in September 2022 prohibiting the import of commodities derived from deforestation has caused frictions between Brazil and the EU.

The approved bill was added to the agreement and could lead to sanctions if Brazil does not comply.

"The premise that must exist between strategic partners is mutual trust and not mistrust and sanctions. In parallel, the European Union approved its laws with extraterritorial effects that modify the agreement's balance. These initiatives represent potential restrictions on Brazilian agricultural and industrial exports," said Lula.