Despite recent divergences involving the Mercosur-European Union agreement, such as health requirements for meat, agricultural quotas and mechanisms to protect the European market, Apex-Brasil maintains its projection of US$1 billion in additional trade between the blocs.
In an interview with CNN, , stated that the potential of the agreement goes beyond quotas for traditional agricultural products and could open up space for sectors with low participation in the European market, such as . According to him, the estimate is conservative and the treaty should also boost investments in Brazil and strengthen trade relations with strategic partners, such as China.
Check out the main points of the interview:
CNN: Could the recent obstacles involving the Mercosur-EU agreement, especially discussions on antimicrobials and agricultural quotas, reduce the expected gains for Brazil?
Laudemir Müller: I remain very optimistic. We are talking about 543 sectors out of five thousand that are impacted. We are not talking about all sectors, we are only talking about a part.
CNN: Which sectors have the advantage?
Laudemir Müller: I will give the example of table grapes, in which Brazil made the first shipment under the agreement last week. The country currently holds 1.5% of the European table grape market, which is a US$5 billion import market. If we reach 3% participation, we will reach almost US$ 170 million. If we reach 5%, we will exceed US$250 million. We are competitive, our price is good, we have capacity, scale and soil. When it comes to meat, no one expects us to change everything from one moment to the next. That’s why we’re talking about just US$1 billion. It’s a very modest estimate.
CNN: Why do you consider this projection conservative?
Laudemir Müller: Because Europe imports US$3 trillion a year from outside the bloc. Mercosur imports US$340 billion. Germany imports US$1.4 trillion per year — but 70% of this import comes from countries with which Europe has an agreement or some type of trade preference. How do you enter a US$1.4 trillion market without having any agreement? It’s very difficult. We can do it, but it’s very difficult. This agreement creates a new space. Therefore, I think this additional US$1 billion is a very modest estimate.
CNN: How do you see the issue of quotas?
Laudemir Müller: The point is for you to improve your position, make a gradual entry. You can’t open everything at once. So let’s manage a quota. I don’t see it as a big setback. I see it as part of the process. So no one expects a surge in exports. And if it happens, there will be . It’s a slow thing for us to get into, and that’s natural.
CNN: Can the agreement attract more European investment?
Laudemir Müller: I’m very sure of that. Germany has a very high energy cost impact. And we are talking about sectors that will demand a lot of energy. So Brazil fits well into this equation.
CNN: Is Brazilian agriculture already used to dealing with this type of barrier?
Laudemir Müller: Brazil learned to navigate this environment. Open market, close market, enable plant, schedule technical visit, then the visit is postponed, send report, send another report. This complexity is not exactly new to us.
CNN: Does the discussion about antimicrobials fall into this category?
Laudemir Müller: Yes. But it’s not a new subject. We need to conduct this discussion well, take care of Brazil’s image and clarify the necessary points. It is still very difficult for Europeans to understand Brazilian agriculture. They live a completely different reality.
CNN: Do you see logistical bottlenecks in taking advantage of the agreement with Europe?
Laudemir Müller: No. Europe is not a new market for Brazil. We are talking about increased trade. I don’t see route or connection problems.
CNN: Where are logistics still a problem?
Laudemir Müller: In China, for example. The opening for table grapes is a case in point. We still haven’t found adequate logistics. Sometimes the route is too expensive. In other cases, there is no stopover. And then you don’t make the scale viable because the logistics don’t make the cut. It’s a complex equation.
CNN: Does this reinforce the importance of the Bioceanic Route?
Laudemir Müller: I believe so. The Chinese would not invest billions of dollars in the port of Chancay if they were not thinking about safer and cheaper routes. I really believe in this connection. But there is also a cultural issue. Brazil has become accustomed to looking only at the Atlantic. With my back to Suriname, to Guyana. We only look one way. But this has been changing. If you tell a businessman from Cuiabá today that in two and a half, three days, a truck could be at the Pacific port and head to Asia in another twenty-odd days, many people still won’t believe it.
CNN: How do you assess the current situation in the Brazil-China bilateral relationship?
Laudemir Müller: I left even more convinced that Brazil and China are experiencing the best moment in their bilateral relationship. This does not mean that China cannot adopt safeguards or protective measures. He can. But the relationship is very strong. I met with a governor of Shenzhen, who is one of the most important people in the Communist Party. We talked about strategy. What I heard several times was the importance attributed to the relationship between President Lula and President Xi Jinping.
CNN: Does the trade war between the United States and China create opportunities for Brazil?
Laudemir Müller: It creates opportunities, but it also demands attention. The Chinese look to Brazil even more because they see us as a stable partner. But at the same time they don’t want to depend excessively on anyone, even if it’s a great friend. When they put a safeguard on meat, they are thinking about the internal price, about other relationships. And Brazil is understanding this. We are not just betting on China. We are looking at Japan, Korea, Mexico and several other destinations. Brazil is positioning itself and playing with several cards.
CNN: In addition to commodities, what else is Brazil building with China?
Laudemir Müller: The coffee. We are doing this together with Chinese companies in Brazil, bringing a coffee culture to China, including specialty coffee. We signed a partnership with a specialty coffee company. And then come other products. Sesame is a phenomenon. It goes from zero to almost US$200 million in exports, in the third and sometimes even fourth harvest. Fruits, even without us having found a good logistics solution.
CNN: Apex’s mission took family farming cooperatives to China for the first time. What was the result?
Laudemir Müller: It was a historic milestone. Convincing cooperatives and entrepreneurs to go to China is not simple. We had very interesting cases, such as AmazonBai, from Amapá, which managed to sell its entire year’s production and began to see possibilities that previously seemed impossible.
CNN: Which markets are expected to gain importance in the coming years?
Laudemir Müller: India and Africa are two very clear examples. India is not a new China. It’s a different country, with a different culture, a different rhythm, a different government — it’s a democracy. And what we notice is that she is skipping some steps. There are almost no supermarkets in India, the cold chain is very poorly established, but they are saying they will jump straight into e-commerce.
How do you go from a street fair to e-commerce? That’s what’s happening there. But we are monitoring a portfolio of 12 large Indian investors, we have an office there, and the trade flow has practically doubled in the last three years. It’s still low, but the potential is great.
Africa will also have increasing weight due to population dynamics. We will reach 10 billion inhabitants soon [no mundo] and 70% will come from Africa in the next 30 years. When we look at the IMF projections for the next 20 or 30 years, we see Nigeria as the fifth or sixth economy in the world.
