France to help fund new metro in Brazil's business hub

A plane taking off from Congonhas Airport overflies Sao Paulo. (AFP/Miguel Schincariol)

SAO PAULO, Brazil: France will help fund a new metro line in Brazil's commercial hub Sao Paulo, in one of two major accords signed on Friday during President Francois Hollande's trip to promote trade.

Sao Paulo state, the wealthiest in this Latin American powerhouse, will also make what Hollande called a "major" investment near Paris in a project that aims to create 2,500 French jobs.

"I think the metro must be built quickly," Hollande quipped on Thursday as he got a taste of the horrendous Sao Paolo traffic, when he flew in from Brasilia for an encounter with the local French community.

Hollande met with Sao Paulo state governor Geraldo Alckmin to sign the deal for a $410 million investment by France's development agency to build a metro between the airport and the city centre.

The second agreement concerned what the French leader described as "a major Brazilian investment" of some US$890 million from Sao Paulo to build a world trade centre near Paris' airport.

Hollande then joined his Brazilian counterpart Dilma Rousseff at a forum attended by business leaders from both countries.

"I want to see more French investments in Brazil," Hollande told the forum. "I also want Brazilian investments in France."

Expressing full confidence in Brazil's potential, he renewed his call for doubling two-way trade, currently valued at around US$9 billion, by 2020 based on technology transfer.

He also suggested regular bilateral consultations to further that aim.

"To double our trade by 2020, a target set by our two heads of state, infrastructure contracts, the strategic axes of our partnership, are important; energy, space, defence, high technology," France's minister for foreign trade Nicole Bricq told AFP.

She stressed the role French medium-sized companies must play in responding to the aspirations of Brazil's new middle class for a "better quality of life", particularly in health and sustainable urban life.

France is the fifth biggest investor in Brazil, with 600 French firms operating in the world's seventh largest economy.

Insisting Brazil's economy is fundamentally strong despite its anaemic GDP growth, 2.5 per cent expected this year, Rousseff also lobbied for French investment in this emerging power of 200 million people.

Both she and Hollande stressed the importance of nailing down a free trade deal between the European Union and South American trading bloc Mercosur.

The protracted negotiations have stalled over differences on agriculture -- notably Europe's subsidies to its farmers, which undermine South America's efforts to sell its own products.

"Brazil and Mercosur are ready to make their trade offers. We hope to see an exchange of offers in January," Rousseff told the forum.

Hollande, accompanied by a large business delegation and several ministers, arrived Thursday in Brasilia where he had wide-ranging talks with Rousseff with a strong economic focus.

Several contracts and accords were signed during the visit, including the supply of a US$550 million civilian-military telecoms satellite by French-Italian firm Thales Alenia Space.

As expected no decision was announced on France's bid to sell its Rafale fighter jet. Brazil is looking to buy 36 multi-purpose jets to modernize its air force -- a multi-billion-dollar deal.

The Rafale fighter, built by French firm Dassault Aviation, is up against US aviation giant Boeing's F/A-18 Super Hornet and Swedish manufacturer Saab's Gripen.

After the meetings Hollande left Brazil for neighbouring French Guiana.