Sergio Augusto de Abreu e Lima Florêncio Sobrinho

Brazil Ambassador to Mexico

What is the role that Mexico plays for Brazilian investment in North and Central America?

As time passes, Mexico occupies a more important place as a destination for Brazilian investment in North and Central America. For example, during the meetings held between Presidents Lula and Mexico’s President Calderon at the Riviera Maya last February, the two leaders announced a joint investment of US$2.5 billion. It will be initiated by the Brazilian Company Braskem, associated with IDESA, for the construction of a petrochemical complex in Coatzacoalcos, Veracruz. This investment, the largest from Brazil registered in Mexico up to now and the most important in the petrochemical sector during recent years, will generate an important economic spin-off in the regions of Mexico just mentioned.

Today Mexico has an important investment in large diverse Brazilian companies in many sectors. These include the Automotive, petrochemical, steel, manufacturing, infrastructure, and cosmetics industries, and many others.

How successful has the Economic Complementation Agreement signed between Mexico and the MERCOSUR been in terms of increases in Brazilian investment in Mexico?

The Economic Complementation Agreement (ACE-54) was signed in July of 2002. This establishes the basis for the Free Trade Agreement between Mexico and MERCOSUR by eliminating duty tariffs, restrictions and other obstacles that affect reciprocal commerce.

It is about an agreement that globalizes the treaties celebrated or to be celebrated between Mexico and the countries of the MERCOSUR in the ambit of the ALADI, and takes into account agreements such as the ACE-6 (Mexico-Argentina); the ACE- 53 (Mexico-Brazil); also the ACE-60 (Mexico-Uruguay) and the ACE-55. This latest one gives 100% preference for Automotive Industry products.

Thanks to these protocols Mexican exports to the MERCOSUR increased 390%, going from US$760 Million in the year 2003 to US$3.8 Billion in 2009.

However, the commerce and the investments between our countries are far from reaching their true potential, because we are still in need of even more extensive agreements.

What is the level of satisfaction of Brazilian companies with their operations in Mexico?

The level of satisfaction for the Brazilian companies with their operations in Mexico is very high. Mexico occupies a special place in the growth plans of many important Brazilian companies in diverse sectors.

Also, the recovery of the Mexican economy in 2010 and the favorable expectations regarding the country’s growth reinforce the interest of Brazilian Companies to invest in Mexico.

What is your outlook for Brazilian trade and investment in Mexico?

My perspective is very positive. There is a wide potential to be explored in bilateral business and a clear disposition on the part of both governments on this way. Commerce and investments still haven’t corresponded to the size of the two largest Latin America economies.

The interest that Brazil has in having a Strategic Agreement of Economic Integration with Mexico is this–it is the perception that the economic integration between Mexico and Brazil will result in a wide range of excellent opportunities and benefits for the private sectors and populations of both countries.

Mexico and Brazil are two economies that complement each other in many ways. Our bilateral commerce is composed mainly of industrialized products. For example, Mexico is a great producer of paper products and aluminum artifacts and Brazil produces cellulose paste and raw aluminum.

Is there any additional Brazilian investment in Mexico to be expected in the near future?

Mexico has become one of the main destinations for Brazilian investments during the last few years thanks to its economic stability, its closeness with the U.S. and its wide net of commercial agreements with 44 countries in the world.

Our expectation is that Brazilian investments in Mexico will be quadrupled in the next few years. As I mentioned earlier, the Brazilian Company Braskem will invest US$2.5 Billion in Mexico in the next years. As pointed out, this will be for the construction of a petrochemical complex.

Based on the experience of the Brazilian investments in the MERCOSUR, it is possible to expect that as the commercial negotiations between Mexico and Brazil make progress and as the commercial flows continue to increase, the Brazilian investments in Mexico will tend not only to grow, but also diversify.

Are there specific sectors targeted by Brazilian companies?

Brazil has a diversified industry and a strong internationalization process. This is why many important Brazilian companies are operating in Mexico in industries as identified, such as automotive, steel, chemical, manufactures, software, infrastructure, cosmetics, among many.

Also, the existence of innumerable possibilities of cooperation in diverse sectors is real. These sectors include renewable energies, particularly ethanol and bio-diesel.

It is necessary to keep driving the strategic alliances between both countries forward, especially in terms that take advantage of the dynamic potential of both economies.

Please explain the interest of investment of PETROBRAS in Mexico:

The operations of Petrobras were initiated in Mexico in the year 2003. They are being developed in the north of Mexico in the Burgos Basin and correspond to the scheme of Contracts for Multiple Services (CSM). They allow for, in a particular way, the participation of private companies in integral projects related to the production of gas, which is not associated with other production, inside the Burgos Basin. Strategically for Petrobras, the operation has potential to generate exciting new business opportunities in Mexico.

Which conditions are needed in Mexico to increase Brazilian investments?

We need an ample strategic agreement between Mexico and Brazil. It has to deal with not only commerce, but also the need to establish clear rules providing certainty for investment and address themes such as purchasing Governmental and intellectual property.

It is also necessary to prioritize approaches for the private sectors in both countries with the objective of finding specific concrete opportunities in identifiable sectors. We have to overcome the prejudices that our countries still have. The assumption that Mexico as well as Brazil have changed has to be expanded, because at this time both countries have open and diversified economies with dynamic potential to grow.

What is the future of Brazil and Mexico in the Aerospace Industry?

In the Aerospace Industry there is a great possibility of cooperation and technological Exchange between Mexico and Brazil. The advances of Brazil in the Aerospace Industry seem to be reflected in the fabrication of aircraft as well as in the exploration and exploitation of exterior space.

The Brazilian Company of Aeronautic (Embraer) is one of the largest Aerospace companies in the world. With over 40 years of experience in projects, fabrication, commercialization and sales, the company has already produced 5,000 airplanes that now operate in 88 countries on all five continents.

The creation of the Mexican Space Agency is an important step for the Aerospace Industry in Mexico. It opens diverse possibilities for exchange with Brazil. The exchange and development of new technologies, along with the experience that Mexico possesses in the astronomic studies field, as well as in Astrophysics, also represent impressive areas for new opportunity.

In the same way, Brazil offers Mexico strong reinforcement for the study and development of new technologies in the Aerospace and Aeronautic Industries.