After 25 years of negotiations, a long-awaited free trade agreement between teh Mercosur bloc and the european Union (EU) appears to be within reach. The announcement, made in Montevideo, marks a significant step forward after years of political and economic shifts, the COVID-19 pandemic, and intense negotiations.
The agreement has evolved beyond a simple trade liberalization treaty. It now encompasses crucial aspects like labor and environmental standards, reflecting the changing global landscape.
While a pre-agreement was reached in 2019, it ultimately stalled due to opposition, especially from France. This time, however, experts see a glimmer of hope. “From a strategic, geopolitical and economic perspective, it is a positive signal from both sides to encourage free trade between the two regions,” says Detlef Nolte, a researcher at the German Institute for Global and Regional Studies (GIGA).”It is also a signal towards Donald Trump, who has threatened to increase tariffs,” he adds.
Nolte highlights the symbolic meaning of the 2019 pre-agreement coinciding with the Trump governance. “This is also a sign of the EU’s interest in Latin America.Furthermore, many European countries are in a complicated economic situation and from this perspective it is in Europe’s interest to facilitate trade with the Mercosur countries,” he explains.
The path to finalization remains complex. French President Emmanuel Macron’s opposition could prove a major hurdle. The proposal must undergo legal review, translation, and votes in the Council and European Parliament.
Andrés Malamud, a Uruguayan political scientist at the Institute of social Sciences of the University of Lisbon, views the Montevideo announcement as “a sign of optimism and pressure towards France.”
“There are two elements that are more positive than in 2019: It is more advanced because there is a prior review done and it includes environmental clauses.The disadvantage is that in the first agreement Macron celebrated and in this he opposes,” Malamud notes.
Not Just a Trade Agreement
José Antonio Sanahuja, professor of International Relations at the Complutense University of Madrid, emphasizes the evolution of the agreement.”When this agreement was proposed in the 90s,we were in neoliberal times and it was fundamentally about reducing tariffs. It was an instrument to liberalize trade. Now it is a very different agreement,” he says.
Sanahuja highlights the inclusion of political and cooperation sections, as well as clauses safeguarding environmental concerns, industrial advancement, and human rights.”the importance of this agreement now is geopolitical. It is an instrument so that both parties have margins,autonomy strategic and above all it helps us avoid being trapped in the crisis of globalization and in the geopolitical competition between China and the United States,” he concludes.
In a world grappling with trade wars, high tariffs, and the weaponization of trade, investments, and resources, a new agreement offers a beacon of hope. “An agreement like this allows us to have a very large market, subject to rules, where we have mutual confidence that none of us will engage in these harmful practices,” a leading expert explains.
Criticisms and Fears
Though, the agreement, which aims to liberalize trade between the European Union (EU) and the Southern Common Market (Mercosur), has sparked criticism. Some argue that it could suffocate local industries in Mercosur due to competition from the EU’s robust industrial and manufacturing sectors. others warn that it promotes an extractivist model, encouraging the export of raw materials from Mercosur in exchange for manufactured goods from the EU.
On the European side,concerns center around the potential impact of Mercosur’s agricultural sector.”France is especially critical, but poland and the Netherlands also have reservations,” notes a researcher.”There are also warnings about potential environmental damage.In my opinion, I believe that the protectionism of some european farmers is behind this opposition.”
The researcher emphasizes that the impact on European agriculture, while a concern for some, is likely to be minimal. “This debate gives the impression that we are going to have a wave of meat imports from Mercosur to Europe and that European agriculture is going to disappear. The problem in France is that the government is very weak and has to contend with half of the farmers protesting.”
It’s important to note that the agreement doesn’t wholly liberalize meat imports but rather implements quotas. “Many studies show that the volume arriving from Mercosur will not increase substantially,” the researcher adds. “In the case of Brazil, 80% of production is consumed domestically, and of the rest, most is exported to China. Europe has a smaller share, between 6% and 8% of what is exported.”
“Someone illustrated it by saying that what we have opened in the European market is equivalent to two hamburgers and a chicken fillet per European per year,” another expert adds. He also points out that a compensation fund is proposed to address potential losses for European farmers.
Opportunities and Benefits
Proponents of the agreement highlight its potential to unlock significant economic benefits.”The positive aspect is that it gives us mutual access to a market of nearly 800 million people, for large, medium, and small companies, and eliminates tariffs. For the EU alone, the savings from this agreement are estimated at 4 billion euros. It allows Mercosur countries to have guaranteed access to what they are most competitive with, the agricultural sector, and allows us together to raise environmental and labor standards,” one expert emphasizes.
He notes that France, despite its vocal opposition, stands to gain considerably from the agreement. “France can obtain enormous advantages from this agreement in its automobile, industrial, and agri-food sectors of prepared products, which will have much better access to Mercosur and will also be protected products. The agreement includes 200 geographical indications of European origin.”
“What specialists say is that this is not about trade, but about disciplines and investments. It seeks for European investments to arrive in Mercosur, not so much for the market to open. It also seeks to impose disciplines in Mercosur, raise the quality of exports, and forces them to comply if they want to sell,” another expert explains.This could encourage Mercosur to modernize its industry to enhance its competitiveness.
“There are heterogeneous costs and benefits, there are winners and losers in both regions, but the aggregate benefit is positive within Europe and Mercosur, although there are sectors for which this is not the case and they must be compensated,” the researcher concludes.
## Mercosur-EU Trade Pact: A Sign of hope or a Looming Threat?
**World-Today-News Exclusive Interview**
After 25 years of tumultuous negotiations, a free trade agreement between the Mercosur bloc and the European Union (EU) seems within reach. The announcement, made in Montevideo, marks a pivotal moment after years of political and economic hurdles, the COVID-19 pandemic, and intense diplomatic maneuvering.
This agreement is much more than a simple tariff-cutting exercise. It incorporates crucial aspects like labor and environmental standards, reflecting a changing global landscape where trade deals are increasingly scrutinized for their broader impact.
**A Second Chance After a Stalled Deal?**
While a preliminary agreement was achieved in 2019, it ultimately faltered due too opposition, primarily from France. This time,however,experts sense a renewed optimism.
“From a strategic, geopolitical, and economic perspective, this is a positive signal from both sides encouraging free trade between the two regions,” asserts Detlef Nolte, a researcher at the German Institute for Global and Regional Studies (GIGA). “It’s also a signal aimed at Donald Trump, who has threatened to increase tariffs,” he adds, highlighting the potential geopolitical implications of the agreement.
Nolte points to the symbolic significance of the 2019 pre-agreement coinciding with the Trump administration. ”This is also a sign of the EU’s growing interest in Latin America.Moreover, many European countries are facing economic difficulties, and from this perspective, it is indeed in Europe’s interest to facilitate trade with the Mercosur countries,” he explains.
**Challenges Remain: Political Opposition and Legal hurdles**
The path to finalization is still complex. French President Emmanuel Macron’s opposition could emerge as a major obstacle.
The proposed agreement must undergo legal review, translation, and votes within the Council and the European Parliament.
Andrés malamud, a uruguayan political scientist at the Institute of Social Sciences of the University of Lisbon, views the Montevideo announcement with cautious optimism. ”There are two elements more positive than in 2019: It is more advanced because there has been a prior review involved and it includes environmental clauses,” Malamud notes. “The disadvantage is that in the first agreement, Macron celebrated, and this time he opposes,” he adds, highlighting the unpredictable nature of political dynamics.
**A New era for Trade Agreements**
José Antonio Sanahuja, Professor of international Relations at the Complutense University of Madrid, emphasizes the evolution of the agreement. “When this agreement was proposed in the 90s, we were in neoliberal times, and it was fundamentally about reducing tariffs. it was an instrument to liberalize trade. Now, it’s a very different agreement,” he says.
sanahuja highlights the inclusion of political and cooperation sections, and also clauses safeguarding environmental concerns, industrial advancement, and human rights. “The importance of this agreement now is geopolitical. it is an instrument so that both parties have margins, autonomy, and above all, it helps us avoid being trapped in the crisis of globalization and in the geopolitical competition between China and the United States,” he concludes.
**A Beacon of Hope in a Protectionist World**
In a world grappling with trade wars, high tariffs, and the weaponization of trade, investments, and resources, a new agreement offers a flicker of hope.
“An agreement like this allows us to have a very large market, subject to rules, where we have mutual confidence that none of us will engage in these harmful practices,” a leading expert explains, highlighting the potential benefits of a rules-based trading system.
**Critics Remain Vocal: Potential Threats to Local Industries and Habitat**
Despite the optimism, the agreement has faced criticism. some argue it could suffocate local industries in Mercosur due to competition from the EU’s robust industrial and manufacturing sectors. Others warn of an “extractivist” model,encouraging the export of raw materials from Mercosur in exchange for manufactured goods from the EU.
On the European side, concerns center on the potential impact of Mercosur’s agricultural sector. France is especially critical, but Poland and the netherlands also have reservations. Warnings abound about potential environmental damage. ”There is the obvious protectionism of some European farmers behind this opposition,” suggests a researcher, highlighting the complex interplay of economic and political interests.
While the impact on European agriculture is a concern for some, it is indeed likely to be minimal, according to experts. “This debate gives the impression that we are going to have a wave of meat imports from Mercosur to Europe and that European agriculture is going to be destroyed. It’s exaggeration,” the researcher adds, urging a nuanced understanding of the agreement’s potential impact.
The Mercosur-EU trade pact, while facing hurdles, truly represents a defining moment for both regions.Its success or failure will have far-reaching consequences, shaping the future of trade, geopolitics, and economic cooperation in a rapidly changing world.
