EU-Mercosur agreement transforms the southern continent on the other side of the Atlantic into a strategic market
South America’s largest economy offers a large market, a diversified industrial base and a growing demand for modern technology. Along with negotiations at political level, opportunities for business cooperation have opened up. It is the combination of political support, trade liberalisation and institutional backing that creates the conditions for Slovak companies to operate.
Industrial opportunities
The Brazilian market is attractive in sectors where Slovak companies can participate in global supply chains. The automotive and engineering industries play an important role, where Slovak companies have experience in the production of components, technologies and automation. Demand is not only for manufacturing, but also for maintenance, servicing and related industrial services. Agricultural and food solutions are a promising segment, building on Brazil’s position as one of the world’s largest commodity producers. Interest is focused on processing technologies, efficient resource management and agricultural trading. Green technologies, energy and IT technologies, including cybersecurity, are of growing importance. Brazilian industry is facing pressure to increase energy efficiency and reduce emissions. The biofuels and biomass processing segment is attracting particular attention. There is also cooperation in the defence industry. Modernisation projects create room for technological cooperation and know-how transfer.
In December 2024, Slovak Eximbanka was the first export credit agency in the world to agree cooperation with the Brazilian bank ABGF. “Also thanks to very good and formalised relations with local institutional and banking partners, we are able to support Slovak investments in Brazil more efficiently and faster. At the same time, we obtain better information about Brazilian buyers of Slovak goods and services,” adds Matúš Šársky, Director of Eximbanka’s International Relations Department.
Trade liberalisation
The agreement between the European Union (EU) and the Mercosur countries is a boost for exporters from Member States. The phasing out of tariffs will reduce input costs, especially for industrial products. In some cases, tariffs are as high as 35 per cent, which puts European suppliers at a disadvantage. The liberalisation will affect 91 per cent of the Union’s exports to the region. For Slovak companies, this means a better price position and easier market entry. In addition to tariff reductions, selected non-tariff barriers, mainly of an administrative nature, are expected to be reduced. This will make it easier to scale up sales and expand business activities. The result is greater predictability and lower transaction costs.
Eximbank plays a key role in the expansion of Slovak companies to Brazil. The combination of export financing, credit risk insurance and individual guarantees is crucial for longer maturities. Cooperation with local institutions enables better adaptation of projects to Brazilian conditions. The institutional background reduces risks in distant and complex markets. It allows firms to do deals that would be difficult to do without such support. Eximbank acts not only as a financial instrument but also as a strategic partner. It helps companies navigate the local regulatory and tax environment. At the same time, it acts in an expert and advisory capacity, helping Slovak companies to understand local regulatory, tax and business specifics. “We are currently working on two projects related to the Brazilian market. The first one is about insurance of a loan for an investment. Eximbanka’s client will be a commercial bank that finances the investment of a Slovak entity. The second project concerns the insurance of a long-term receivable of a client, an exporter,” adds Milan Horváth, representative of the Non-Tradable Risk Insurance Department of Eximbanka.
Source: TREND.sk
Author:Tomáš Szmrecsányi