The recent trade agreements signed by the European Union are good news for the Portuguese economy. Although they are not yet 100% operational – in the case of Mercosur, because the European Parliament sent the case to the Court of Justice; in the case of India, because the entire process of legal consolidation is lacking – they show that Europe is awake and willing to fight, responding with free trade to the wave of American protectionism.
Due to our geographical condition and the historical and cultural relationship with Brazil, the treaty with Mercosur is the one that presents the best prospects for national exports. Once it comes into force, Portugal will become the effective European gateway to maritime trade from South America, which constitutes an undeniable competitive advantage.
Furthermore, with the reduction in tariffs, our country will have great potential for growth in the Brazilian market in products that, today, are highly valued by consumers, such as wine – Portugal has the third largest share of wine exports in Brazil, only surpassed by Chile and Argentina – and olive oil. Finally, there will be other sectors that will benefit in addition to agri-food, such as metalworking, automobile components, construction, ICT or engineering and industrial technology services.
As it is a diplomatic deal, the Mercosur agreement is not free from trade-offs and risks. One of the most cited is the possible unfair competition that European agricultural products may face, due to the fact that they comply with environmental and health rules that are much more demanding than those that South American producers face. This threat, however, is sufficiently mitigated in the clauses of the agreement, which provides, among other conditions, for the safeguarding of European protected designations of origin and the guarantee that all products originating from Mercosur will have to comply with the same quality criteria practiced on the European continent.
The partnership with India, announced this week, offers similar prospects and benefits. The opportunities opened up by these agreements far outweigh the threats and, in an international framework marked by uncertainty, it is essential to have signs of stability, dialogue and predictability for the economy to prosper. Europe thus shows that it is on the right side of history and Portugal can only benefit from this.
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