The agreement between the EU and Mercosur reaches a definitive point. The European Commission is accelerating the procedures to close this week, at a summit in Montevideo, the trade agreement with the Mercosur countries (Argentina, Brazil, Uruguay, Paraguay and Bolivia), after 25 years of negotiations and intermittent blockades and despite the rejection of the second The unstoppable advance of China in the region in the face of the loss of influence of the European Union pushes the community club to advance in this pact. The determination of Germany and Spain to push it forward – in the context of Donald Trump’s victory in the United States, which has threatened European products with an escalation of tariffs – gives impetus to Brussels to sign new (or consolidated) trade agreements and diversify their markets and suppliers. The pact with Mercosur, which will create a joint market of more than 780 million consumers, will be the largest that the EU has signed. And it is visible.
“The goal of the EU-Mercosur agreement is in sight,” the president of the European Commission, Ursula von der Leyen, launched on social networks, who arrived in the region this Thursday, together with the European Commissioner for Trade, Maros Sefcovic. , on a key trip to try to give the final and decisive push to the pact. Von der Leyen, who this week begins a new European mandate, will meet this Friday with the leaders of the founding countries of the so-called Southern Common Market, along with Bolivia, at a summit in Montevideo (Uruguay). Brussels wants to close the agreement, the last pending chapter of the pact, before the end of the year. This is the most political part, which addresses regional commitments, according to European and American sources.
France, which sees that the agreement may be about to be closed, increased the pressure on the Community Executive this Thursday in a call from President Emmanuel Macron to Von der Leyen. “The project between the EU and Mercosur is unacceptable as it is,” stated the Elysée.
“There are no rational arguments for not closing an agreement that is also essential for European strategic autonomy and the economy. It’s almost now or never,” says a community source. “If not, others will occupy that space,” he adds. China has significantly expanded its economic presence in Latin America and has already surpassed the United States as the largest trading partner.
On Thursday afternoon, the Minister of Foreign Affairs of Uruguay, Omar Paganini, concluded the negotiation stage. The countries involved, said the minister, “spoke in favor of the agreement. Tomorrow [por el viernes] It will be confirmed with the presence of the leaders.”
In reality, the pact after 20 years of talks, but has not been ratified. France, Ireland, Austria and the Netherlands alleged serious doubts about the sustainability and environmental commitments of the region to delay it and it was then decided to complete it that would include new commitments in these fields. Latin American countries and several European countries that defend the agreement spoke of “protectionism.”
Touchdown in Latin America📍
The finish line of the EU-Mercosur agreement is in sight.
Let’s work, let’s cross it.
We have the chance to create a market of 700 million people.
The largest trade and investment partnership the world has ever seen.
Both regions will benefit.
— Ursula von der Leyen (@vonderleyen)
Now, after new technical negotiations and several tugs of war, it is ready to close. However, France—and lately Poland—continue to oppose it. Paris argues losses in the agricultural sector. However, the European Commission has put on the table subsidies for farmers and agricultural safeguard clauses that can be activated if there is a risk of destabilizing the import market. The import quotas for Latin American products, furthermore, according to a European source familiar with the negotiation, are small and come into force gradually.
Now, it is up to Von der Leyen’s ambition to close the agreement – the European Commission has exclusive powers in trade policy – and then present it to the leaders of the member states in the European Council, where for now it could go ahead by majority, since Unanimity is not necessary for trade agreements. And that ambition is there. Although some voices emphasize, however, that it is not the best time to do so, with the current situation in France, where the Government has just fallen after a vote of no confidence and the president is increasingly questioned. For others, this situation of weakness and the fact that France is mired in other problems is, on the contrary, an opportunity.
The agreement will allow European companies to eliminate some 4,000 million in tariffs applied by the Latin American bloc, which will mainly benefit the automobile industry – which until now is imposed rates of 35% -, machinery (14%-20% ), chemistry (18%) or pharmaceutical (14%). But it also breaks down barriers in sectors such as textiles, footwear, wines and spirits, according to European data. In exchange, it will boost exports, which are mainly agricultural and livestock products, from the Mercosur countries to Europe.
Luiz Inácio Lula da Silva, the president of Brazil, the country that has led the negotiation on the South American side, has been expressing for weeks that the negotiation of the trade agreement with the EU will be definitively closed before the end of the year. The pending issues after the three technical meetings that the two blocs have held in Brasilia since June are already on the leaders’ tables, according to Brazilian negotiator Mauricio Lyrio. The leaders have the last word, reports Naiara Galarraga Gortázar from São Paulo.
Beyond the commercial advantages, Ambassador Lyrio has emphasized the political significance of creating, precisely now, one of the largest free trade zones on the planet: “At a time of conflicts, antagonism, protectionism and unilateral threats, [el acuerdo] “It would be an investment in commercial integration and common values, such as democracy and sustainability.” A strong joint political signal from the two blocs in the face of the radical change that is coming with Trump. For the Mercosur countries it also means diversifying, mitigating dependence on China and the United States.
On the Argentine side, the other major partner of Mercosur, the arrival of Javier Milei represents an additional problem to the agreement with the EU. Although the far-right does not openly oppose the signing of the treaty, he will arrive in Montevideo with an agenda that calls into question the survival of the bloc: he will demand that bilateral agreements with third countries, outside of Mercosur, no longer require the approval of the rest. of the partners. That is an old demand of Uruguay that Brazil and, until now, Argentina have always opposed. Milei has already announced that his intention is to advance a free trade agreement with the United States. He trusts that the good harmony he has with Donald Trump, whom he considers, along with himself, “the greatest leader on the planet,” will be enough to move forward in that direction.
Milei will be an informal spokesman for Trump at the meeting of presidents this Friday. It will clash with Brazil’s integrationist agenda and, at the same time, work for the Republican in its strategy to contain China’s influence in the region, already very advanced.
While the United States never had anything beyond Mexico, Beijing has been working like an ant for years. It has concentrated its investments above all on infrastructure. The most recent example was the inauguration, three weeks ago, of the Chancay megaport, located 80 kilometers north of Lima. The work, begun in 2007 with an investment of 1.2 billion euros, consolidates China’s presence in the region and at the same time turns Peru into the main port in the South Pacific for the Asian market. The United States is still the largest trading partner of Latin America as a whole, but China is already the largest in South America.
