EU-MERCOSUR agreements

Preliminary insights

Across two decades, the European Union and MERCOSUR have grappled with an agreement that seems to be facing significant challenges. MERCOSUR, known as Mercado Común del Sur in Spanish (Mercado Común Do Sul in Portuguese), was conceived with the aim of promoting free trade among its member countries, while also committing to valorize and protect domestic products during exchanges with other nations. The idea of forming a common bloc emerged in the 1980s, during the democratic era, which marked the end of economic nationalism. This period pushed South American countries, united by a shared history, towards a cooperative vision rather than a competitive one. Therefore, Brazil, Argentina, Uruguay, and Paraguay signed the Treaty of Asunción, on March 26, 1991, marking the formal establishment of MERCOSUR. In 1995, trade taxes between the four founding countries were abolished, and a common external tariff was established against third countries. In addition to the founders, MERCOSUR has welcomed associate countries such as Chile, Colombia, Suriname, Ecuador, and Guyana, while Bolivia is still undergoing the accession process. The Presidency of MERCOSUR, which rotates every six months, is currently held by Brazil under the leadership of Lula da Silva. The decision-making process falls under the jurisdiction of the Common Market Council, composed of the Foreign Affairs and Economy Ministers of the member countries.

Political stances

The protracted negotiations between the EU and MERCOSUR, which began in 2000 and concluded positively in 2019, foreshadowed the signing of a comprehensive global free trade agreement. However, ratification has been hindered by the EU's demands regarding halting Amazon deforestation and Brazil's commitment to combating climate change. The divisions among EU Member States are clear, with France, Ireland, Austria, and the Netherlands in opposition due to concerns regarding agricultural lobbies and the competition posed by low-cost South American beef. In response, the President of the European Commission, Ursula von der Leyen, stated that the agreement is "within reach" and pledged to resolve the remaining differences on the sidelines of the UN Climate Conference COP28 in Dubai. Strong criticism arises from opposition groups, particularly from NGOs, accusing European interests of neocolonialism, with the sole aim of exploiting and extracting the natural resources available in South America, including rare earth materials (especially copper and lithium). This confirmation would solidify South America's position as a provider of raw agricultural goods and materials, while simultaneously emphasizing its role as a destination for finished and industrial products. This dynamic reinforces historical colonial patterns, often to the detriment of territorial integrity and the human rights of indigenous populations and farmers. Time will tell if the agreement may conflict with the provisions of the European Green Deal, favoring solely the chemical and agro-food industries at the expense of environmental protection and climate.

Worries and uncertainties

The Rio de Janeiro summit held on December 7th of this year underscored the intent to definitively conclude and sign an agreement. However, it also raised numerous concerns, particularly from French President Emmanuel Macron and the Netherlands. The position of Argentina under the new Milei government is uncertain, while Brazil and Germany have expressed their readiness to sign.

Given China's rise in international markets, the EU seeks to ensure a stable presence in Latin America, being one of the main investors with nearly 700 billion euros in foreign investments. Since 2013, the European Community has increased its trade with Latin America, reaching a total of 369 billion euros. The EU is extending its search for guarantees on divisive issues such as the environment, democracy, and human rights, striving towards achieving the objective of "zero deforestation" and forming a unified front to support Ukraine amidst the Russian invasion. Nevertheless, the MERCOSUR region also aims to establish partnerships with China, Russia, South Africa, and India (the BRICS bloc countries) to enhance its international standing through multipolar alliances. Under Santiago Peña's presidency in MERCOSUR interests are expanding towards Asian and Middle Eastern countries, with the bloc now prioritizing the United Arab Emirates and Singapore. The ultimate entrance ofInizio modulo Bolivia into Mercosur provides evidence of a long-term strategy, despite threats of withdrawal and environmental limitations imposed by the agreement with Brussels.

Projected scenarios

Undoubtedly, reaching an EU- MERCOSUR agreement would mark a notable achievement for Brussels and a positive turning point for the European Union, especially considering the recent setback in negotiations for a free trade deal with Australia, which the European capital faced just a month ago.

On the other hand, MERCOSUR stands to gain significant advantages from reaching an agreement, especially given the prolonged negotiations. However, the timing of the agreement's finalization in the short term remains uncertain, considering the divergent positions on crucial issues requiring evident and urgent alignment, such as addressing inequalities and transitioning to more sustainable and green policies. Another element of uncertainty stems from the European Union's concern about the potential competition from low-cost South American products compared to domestically produced ones. This economic challenge underscores the urgent need to strike a balance between the interests of both parties.Inizio modulo

Despite numerous challenges, negotiations and trade relations have gained fresh impetus in early December. This renewed momentum fuels hope for reaching a definitive compromise, yet it also reflects the complexity of international relations in the current context and the need to overcome differences and achieve a mutually agreeable resolution for all parties involved.

Translated by Iuliana Cindrea

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