Portugal is part of the EU, which enables it to enter into a number of international markets as well as profit from the trade agreements established by the EU. The current representation of Portugal in the EU where all trade negotiations are conducted on behalf of the member countries has a key impact on international relations and trade followed by Portugal. This extends to treaties that the EU has with countries such as the UK, Japan, and South Korean, Canadian, and other countries. As part of the EU single market, Portugal benefits from a certain degree of removing controls on the movement of people, capital, goods, and services within the constituent member states. This is beneficial to its economy and increases its exports.
The main trade partners of the Portugal economy are the countries of the European Union, especially France, Germany and Spain. At the same time, the association of countries’ trade agreements allowed Portuguese businesses to reach foreign markets and diverse their offered export in high-tech, electronics, car manufacturing, and even agriculture. Further, these agreements promote the internationalization of Portuguese firms, by providing protection of intellectual property rights, establishing environmental rules, and promoting fair competition. The major trade agreements and how they affect Portugal are:
EU-Canada comprehensive economic and trade agreement (CETA)
For Portugal, one of the main economic deals is the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada. CETA was partially implemented in 2017 and has since cut or killed levies on a large number of wares exchanged between the EU and Canada, opening up new export markets for Portuguese organizations. Exports of Portuguese wine, olive oil, and seafood, for instance, are highly appreciated in Canada’s market and have benefited from CETA. CETA facilitates the operation of Portuguese businesses in industries like technology, engineering, and finance by opening up markets for services in addition to commodities. The long-term economic relationship between the two countries is based on the labor movement and the protection of investments and simplified procedures for doing business that CETA offers to Portuguese firms.
EU-Japan economic partnership agreement
The Economic Partnership Agreement between the EU and Japan which came into force in 2019, affects Portugal. After the entry into force of the agreement, the Portuguese companies were relieved of customs duties on a range of goods and could more easily move their products to the market. Thus, they have access to one of the largest Asian markets. More export opportunities for such goods like wine and olive oil, or cork are in the cards for Portugal. Since the agreement targets non-tariff barriers, it also helps Portuguese companies in sectors such as cosmetics, pharma, and farming adjust to Japanese standards. This allows Portuguese companies to expand their footprint in Japan while also allowing the citizens of both countries to access a wider assortment of quality products.
EU-Mercosur trade agreement
Portugal is particularly interested in the EU’s upcoming trade deal with Mercosur, the South American trading group that consists of Brazil, Argentina, Paraguay, and Uruguay. Although not yet approved, this deal is anticipated to lower South American taxes on European products, such as Portuguese equipment, textiles, and wine. Because Portugal has historical and cultural links to Brazil, the EU-Mercosur pact is particularly important to Portugal. By incorporating environmental standards and labor rights provisions that are consistent with Portugal’s commitment to sustainability, the agreement would promote sustainable trade. Many Portuguese companies already have strong ties to Brazil, and lower tariffs would boost competitiveness, benefiting both SMEs and larger corporations.
Bilateral trade partnerships beyond the EU
Although Portugal has robust bilateral economic links with a number of nations outside the EU framework, the majority of its trade accords are administered via the EU. Portuguese-speaking nations are most affected, since Portugal uses its language and cultural ties to promote commerce. Key Portuguese allies include Angola, Mozambique, and Brazil; these alliances have promoted economic growth and reciprocal investment, particularly in areas like energy, building, and agriculture. Additionally, Portugal is eager to deepen its commercial relations with the US. Portugal and the United States have increased their trade in recent years, despite the lack of a complete free trade agreement between the two countries. Portuguese exports to the United States include food items, textiles, and equipment. Portugal is also a well-liked location for American investment, especially in the technology and renewable energy industries. Collaborative efforts in scientific research, cybersecurity, and military further solidify the U.S.-Portugal economic partnership.
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