The decision by Brazil's House of Representatives last week to approve a free trade agreement for Israel with Mercosul, the South American free trade area, could have enormous economic consequences for the Jewish state, a member of the delegation traveling with Peres has told reporters in the president's entourage. Speaking on condition of anonymity, the source said that there is a potential for Israel's defense and homeland security industries to earn billions of dollars from Mercosul once the agreement is ratified, particularly from Brazil. Peres's visit gave a lot of momentum to cooperative ventures to Israeli companies such as Elbit, Israel Aerospace Industries and Rafael Advanced Defense Systems, said the well-informed source. All three are already doing business in Brazil and are in the process of negotiating for additional contracts, as are a number of other Israeli companies. Brazil is interested in using Israel's advanced know-how for the production of defense and homeland security equipment. Elbit, for instance, fell in line with Brazil's policy of cooperative ventures by buying Brazil's Aero Electronics company, and employing hundreds of Brazilians to produce Israeli-developed equipment with a "Made in Brazil" label. Other companies are eager to follow suit. At a luncheon hosted for Peres by Defense Minister Nelson Jubin, members of the Israeli business delegation were in attendance, as were leading figures from Brazil's defense establishment who were very interested in hearing presentations by the Israeli companies. The treaty has been in limbo for some time due to Arab pressure on various South American republics. Meanwhile, Sergio Cabral, governor of Rio de Janeiro state, held a luncheon in honor of Peres and his business delegation and invited other prominent local business leaders. Cabral told the Israelis that it is worth investing in Rio de Janeiro, which is expecting 6 percent growth in GNP next year. Rafael Vulej, an Israeli living in Rio who represents Israel-based International Security and Defense Systems, told The Jerusalem Post that in 2007, ISDS was the only Israeli company contracted for the safety of the Pan American Games. It had been part of a consortium of Brazilian and international companies that included Motorola, GE and Intergraph. As a result, Brazilians began to appreciate Israeli know-how and planning, and Rio de Janeiro is looking for Israeli participation in preparations for the Military World Games 2011, the Confederation Cup 2013, the World Cup 2014 and the Olympic Games 2016.