The possible death throes of Greece’s membership of the Euro should not detract from the union’s core attractions. The forerunner of today’s European Community (EC), the European Economic Union (EEC) was set up as a trade body in 1958 to strengthen the economic and social ties across a violent and dysfunctional continent. Its two key members, France and Germany, had fought each other three times over the previous seventy-five years: it was reasoned that drawing both countries and their outliers together in a web of trade would allow for a more prosperous and peaceful continent. It’s worked and yet hand in hand with its enlargement, its ambitions have also expanded. The pressure to federalize key aspects of sovereign powers in the legal, economic and social fields is presenting increasing challenges to elected governments, but also to institutions controlled and run by unelected commissioners.

Brazil’s trade with the European Union (EU) is a perfect illustration of the latter’s strategic importance and implicitly, why its economic clout is likely to sway any doubters (such as the UK) when it comes to membership. But first Greece…from a trade perspective, the brutal truth is that the country is barely significant. The birthplace of democracy accounts for only 2% of Euroland GDP. It’s a position replicated elsewhere in Latin America; only 1% of Brazilian, Argentinian, Colombian and Mexican exports are to Greece and international exposure to Greek financial assets is extremely limited.

Yet, as part of the 28 nation EU, it is a different matter. The Latin American trade bloc Mercosur, itself the fourth largest in the world, is closing in on the biggest trade deal in its 24-year history – the wholesale reduction in tariff barriers with the EU as early as Q1 2016.  For Brazil, such a deal will be equally momentous; the EU is a more important trading partner for Brazil than China (just), accounting for 20% and 19% of total exports respectively in 2013. The catalysts across Latin America provided by a wholesale reduction in trade barriers, as well as the evident and acknowledged need to improve investment and infrastructure, will assist the continent’s transformation (and Brazil’s) to one more like Asia’s, where growth has been dominated by manufacturing, investment and exports.

The Common Alliance of the South (Mercosur) is a trade agreement between Brazil, Argentina, Uruguay, Paraguay and Venezuela that boasts 282.6 million consumers and a combined GDP of $3.2 trillion. With an objective to implement the free movement of goods, capital, services and people among its members, over the last decade they have begun to look beyond the continent’s borders and launch trade negotiations with the likes of the China, the United States and the European Union.

Restoring a Positive Trade Balance with Europe

Some of the foundations are already in place; due to a trade relationship based on primary products such as agriculture, fuels/mining and manufacturing, Brazil is the recipient of half of the EU’s investment across Latin America. When signed, the EU-Mercosur Association Agreement will stimulate intra-regional trade and the broader opportunities for trade and investment. In spite of its current woes, the EU provides a powerful example of collective power that won’t be lost on Mercosur, with its abundant natural resources, size and attractive demographics.

There is another powerful reason for the trade grouping to make progress – the BRICS. With a large Chinese weighting, the organization has a combined GDP equivalent to the US; back in 2007, US GDP was twice as large, though economically very uneven, the BRICS grouping is back in the headlines for its annual heads of state get together in Russia, last year’s being in Fortaleza. China’s economic weight remains by far the dominant force, but Brazil is in second place and as highlighted last week, a more visible and assertive President Rousseff on the world stage will reinforce the perception of further trade deals to be done. One of the most powerful females on the planet, in August 2015 Rousseff will also play host to the undoubted Queen Bee, Chancellor Merkel of Germany. It is tempting to say that Rousseff will be looking for advice on a range of economic and trade related matters, although she doesn’t need any. A more market orientated finance team and the need to increase and broaden the country’s range of exports will provide the backdrop to strengthening Brazil’s regional and international trade ties.