The European Union and Mercosur are expected to announce this Friday (5) that they have finalized a free trade agreement that took two decades to negotiate.
Before its implementation, however, the agreement will have to pass a major test in Europe, where it faces strong resistance from France and other EU members.
What comes now?
The EU could split the deal to speed up its ratification.
The main thrust of the agreement can be approved by a simple majority of European Union legislators and a qualified majority of EU governments. This means he needs the support of 15 countries, representing at least 65% of the bloc’s population.
To block this process, at least four EU members, representing more than 35% of the population, need to oppose it.
France must offer resistance and may find support from Austria, Poland and the Netherlands. Together, they represent around 30% of the bloc’s population. Therefore, they need to find more countries opposed to the agreement.
Germany, Spain and nine other EU members that make up around 40% of the population have called on negotiators to reach a deal this year.
Implementation of the broader political agreement between the blocs, including new rules for overseas investment, may require approval by the national parliaments of the 27 EU countries, a much longer process.
The four founding members of Mercosur — Argentina, Brazil, Paraguay and Uruguay — signaled that they support the agreement, which can be implemented by each one as soon as their respective national Parliament approves it.
What’s at stake?
Leaders have classified the agreement as the largest commercial and investment partnership in the world, bringing together a market with more than 700 million consumers. Economists calculate that the agreement could eradicate around 4 billion euros in tariffs annually. They would be phased out over several years.
For Europe, the agreement would help it export more vehicles and manufactured products, while also ensuring access to minerals crucial to its energy transition. The agreement removes barriers to South American meat and grains, which angers European farmers.
What held up the agreement?
Negotiators agreed to a version of the deal in 2019, but European nations refused to ratify it, citing environmental concerns under Brazil’s then-president, Jair Bolsonaro.
The EU sought environmental guarantees in another parallel text, which Mercosur countries interpreted as new protectionist rules, demanding more concessions in new rounds of negotiations.
Recent talks in Brasília and Montevideo apparently smoothed over the edges in the environmental sector, government procurement and other controversial issues, paving the way for the signing of the agreement.
