What are the winners and losers in Mercosur of the agreement that formalizes the strategic alliance with the EU? A few hours before the agreement was signed in Asunción, the Minister of Foreign Affairs of Paraguay, Rubén Ramírez, spoke of a “balance” which has allowed the negotiations that began more than 25 years ago to be closed. “I can tell you that both parties are dissatisfied“he noted, in recognition that not all sectors of the economies of the South American part will have the same benefits and opportunities from the progressive liberation of the duty.
The agreement will begin to operate provisionally when it is ratified by a country from the South American bloc that makes up Brazil, Argentina, Uruguay and Paraguayand that has Venezuela suspended since 2016 due to its democratic anomaly Bolivia in the process of consolidating its membership. It must later be ratified by the European Parliament and then by the parliaments of all the member states in a long and complicated procedure. The understanding should have been signed last December, but Italia and other countries asked for more time. Luiz Inácio Lula da Silva demanded “courage” from the Europeans to take the step forward. The regional and world scenario itself has changed after the US armed intervention in a South American country within the framework of its determination to recover lost hegemony. The Asunción ceremony is not unrelated to the attempt to discuss the manifest will of the Administration of Donald Trump. Lula realized these mutations and days ago considered the rubric a “historic day for multilateralism” in “an international context of growing protectionism and unilateralism”
Mercosur represents 62% of South American GDP. The association with the EU constitutes nearly 25% of global wealth. The free trade zone includes almost 780 million inhabitants. The negotiators agreed the progressive elimination of more than 90% of tariffsthe reduction of non-tariff barriers and regulatory harmony in significant areas for the development of its 31 countries.
Brazil, the winner
According to the European Commission, the agreement with Mercosur will allow community companies an annual saving of 4,000 million euros. The sectors that benefit most are automobiles, chemicals and pharmaceuticals, along with high-value products such as wine and cheese.
In 2024, Europe was the destination of 48.2 billion dollars of Brazilian exports14.3% of the total exported by the country. Imports were 47.2 billion dollars, 17.9% of the total. Specialists estimate that Brazil will have greater returns of this process by promoting an improvement of 300 million dollars annually in its trade balance and half a point of its GDP. The liberalization of 99% of agricultural imports from the community zone provoke enthusiasm in the South American giant. The so-called agribusiness sector is especially committed to beef, soy, wheat, sugar and ethanol. Its competitiveness worries the European side. Other “export vectors” that would be favored are caféwhich has placed products for 7.3 billion dollars, forestry products (3.0 billion dollars) and juices (1.5 billion dollars). The National Confederation of Industry (CNI) described the approval of the agreement as “a significant step to advance Brazil’s international insertion”. The partnership with the EU, he predicted, will allow for greater investments. The powerful Federation of Industries of the State of São Paulo in turn predicted a “substantial” change not only in exports but in the way in which business had been done. Improvements are also expected for the pharmaceutical and technology industries. “The new agreement between Mercosur and the EU is excellent for Brazil and will increase the productivity of our economy”said the São Paulo newspaper Sheet.
The Argentine case
Last year, Europe represented almost a 14% of Argentine exportswith significant increases in products such as soybeans, in all their processing stages, wheat, corn, wines and biodiesel, flour, crude oil and wheat. It was exported in 2024 for 79.7 billion while imports amounted to 60.8 billion. You can also compete in knowledge-based services. “The agreement with the EU will make us increase meat production by 30%. Not only are we going to sell more, but we are going to be able to sell better,” said Nicolás Pino, president of the Argentine Rural Society (SRA). Industrial activity is more exposed due to production costs. The automotive sector will only open fully in a decade. Argentina appears as a reliable energy supplier and not only as an agricultural competitor. The chamber of the pharmaceutical industry also believes that a good opportunity is opening up. Business chambers and banks They see the horizon of possibilities very favorably.
Uruguay and Paraguay
The path that opens this Saturday in Asunción is observed with optimism and at the same time concern by a “junior” partner of the South American bloc such as Uruguay. GDP is expected to increase by 1.5% from agricultural and livestock exports, as well as an improvement in employment of 4%. He sector industrial It is the one that, according to the unions, is in the midst of less favorable circumstances to compete with European products. “We have a general opinion that is quite contrary and surely in a few days we will be able to have more data,” said the president of the Confederation of Industrial Unions (CSI), Danilo Dárdano, and warned about the consequences of a “primarization” of the economy. The Paraguayan agribusiness has the same confidence in the positive effects of the agreement.
The environmental issue
“The Argentine agroindustrial sector is ready to work and turn the agreement into a tool for solid and sustainable economic development,” said the Argentine Rural Society. The agreement’s negotiators introduced sustainability clauses under the Paris Agreement. However, Latin American and EU environmentalists have previously expressed their fear of the dangers of deforestation. A report commissioned by the French Government, the country most resistant to the agreement in Europe, estimates a loss of 700,000 hectares due to the expansion of cattle grazing and soy cultivation.
The treaty has contemplated the protection of labor rights according to the principles of the International Labor Organization (ILO). Nevertheless the unions of Argentina and Brazil They expressed their concern not only about the dependence on raw material exports and the impact on job insecurity.
Controversies
Although the meeting in Asunción was scheduled at the ministerial level, it is expected the presence in the Paraguayan capital of the far-right Javier Milei and his Uruguayan pair, Yangines orsi. Lula received the president of the European Commission, Ursula von der Leyen, on Friday in Brasilia. His enormous political differences with Milei seemed to lead him not to participate in the ceremony. One of the disagreements has to do with the anarcho-capitalist’s intention to privilege his association at all levels with the United States.
The European Commission has defended the course set for its potential to boost growth, competitiveness and geoeconomic power. The debate within the EU has not been completely settled, beyond the enthusiasm of what has been called the ‘yes’ side led by Germany and Spainwhose exports to Mercosur represent 9% of its total. The agreement can be implemented without approval by the European Parliament, according to European Commission spokesman Olof Gill. However, work is being done to ensure that all members endorse it. The proposal by parliamentarians of different political parties in favor of there being a challenge instance in the Court of Justice of the European Union must be discussed next week. The disputes, it has been pointed out, could only affect the rates of application of what was agreed.
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