The Bloc holds the meeting in Rio de Janeiro that, in the absence of an agreement with the European Union, celebrates the trade pact with Singapore and a key step in the accession of Bolivia, which has been an associated state. In Brazil they see gray clouds towards Argentina with Alberto Fernández’s rejection and Milei’s indecision of the commercial document and, from Europe, they look askance at the signing of a text that does not take the climate into account.
With a gloomy outlook and few expectations, the heads of state of the South American trading bloc, Mercosur, met this Thursday, December 7, in the Brazilian city of Rio de Janeiro. The future of the South American common market and the trade agreement with the European Union depend largely on this meeting.
Luis Inácio Lula da Silva, host of the meeting and president of the main economic power in the region, has aimed in this last half of the year to find a quick conclusion to achieve the agreement with the 27 of Europe; However, one of his main obstacles has been one of his closest neighbors: Argentina.
Your sincere words reaffirm what I always think, partner @LulaOficial.
As president of Argentina, your valuable solidarity with our homeland.
Personally, the conviction that this infinite friendship will continue to bring us together to work for our people 🇦🇷🇧🇷 https://t.co/awJZe3R7a6
— Alberto Fernández (@alferdez) December 7, 2023
Just this week, the outgoing government of Argentina, Latin America’s second largest economy, said it opposes the agreement, while president-elect Javier Milei, who will be sworn in next Sunday, has expressed his support for it.
Brazilian diplomats were optimistic that, under Milei’s mandate, trade negotiations with the European Union will continue and the designated Foreign Minister, Argentine Diana Mondino, reaffirmed this during a visit to Brasilia and an interview with the news agency. Reuters news.
The document, in which a free trade agreement with the EU is expected to open the market to more than 732 million people, could also boost the economies of Mercosur, which together amount to USD 2.86 trillion in terms of Domestic Product. Gross (GDP) is concerned, because in the last three decades, since its creation, trade between the four countries has multiplied by ten, according to official data.
However, trade analysts who have been monitoring the negotiations around Mercosur in recent months agree that “the window of opportunity to close the EU-Mercosur agreement is closing” and its ratification by the European Parliament could face an obstacle. of next year’s elections in Europe.
Does it survive or is it renewed?: the objectives and future of Mercosur
Disagreements with the EU and uncertainty with Argentina
During his electoral campaign before winning the position in the Casa Rosada, Javier Milei repeatedly threatened to leave Mercosur when he was head of state.
His words brought concern to the international market and he drew a hypothetical scenario in which common trade with Brazil, Uruguay and Paraguay would explode.
Her foreign policy advisor, Diana Mondino, helped Milei moderate her speech and she herself has gone out to the media to declare that “Argentina will not leave the bloc.”
“We have no objections; it is frankly desirable that it be approved. It is much better to have it than not to have it,” explained Mondino, adding that he hopes that Alberto Fernández will sign the agreement this week.
His words, although they level Milei’s euphoric statements, do not give complete certainty to the Brazilians, who anonymously and in an interview with the AP news agency said from Rio de Janeiro that they are “waiting to see what Argentina will want (… .) Obviously they will be liberal, but will they be pragmatic?”
“Mercosur is an incomplete customs union and regional trade has progressed slowly in the last two decades. But the political cost of abandoning it is very high, even for Milei,” said former Brazilian Foreign Trade Secretary Welber Barral.
Even Brazilian President Lula da Silva, host of the summit and head of the Latin American trade bloc, admitted his frustration at not having been able to close the agreement.
“I spoke with almost all the presidents of the European Union… I urged Macron to stop being so protectionist, but in any case, it didn’t work,” Lula said in a speech. “Europe’s resistance is really strong,” she added.
Like Brazil, we are determined to preserve the forests. In the next three years, France will dedicate 500 million euros to its preservation. pic.twitter.com/GykWqfjfo1
— Emmanuel Macron (@EmmanuelMacron) December 2, 2023
The economic side is also added to all the back-and-forth of political and diplomatic differences. Argentina has warned that the country’s manufacturing sector would be negatively affected.
The Argentine Foreign Minister, Santiago Cafiero, has expressed that the agreement “as currently drafted” could bring with it restrictions on his country’s exports.
“It is a bad agreement that has a negative impact on manufacturing and agricultural exports (…) Throughout our administration, we always proposed that the discussion on the agreement be reopened because it did not reflect a balance in which both blocks would benefit. “Cafiero said.
With these two scenarios and divisions within the outgoing and incoming Argentine leaders themselves, some experts have said that Europe could take the last word and would point out the new Government of Buenos Aires as one of the main reasons for not ending the document.
Oliver Stuenkel, a professor at the Getulio Vargas Foundation, a think tank in Sao Paulo, told Reuters that “European opponents” will seize on Milei’s radical ideas to justify their views.
“European protectionists could use Milei’s radical rhetoric, particularly on climate issues, to try to block the agreement. Despite his recent moderation, Milei will provide a lot of material for those who seek to demonize him,” he explained.
And precisely that has been the speech of one of the largest in the European bloc: France. President Emmanuel Macron has argued that the EU-Mercosur agreement is “poorly patched”, “dismantles tariffs” and does not “consider biodiversity and the climate”.
Macron’s strong criticism last week, after a meeting with Lula in Dubai, could even generate more resistance to the agreement first initiated in 2019, but then delayed by European demands for environmental safeguards.
Other details of the agreement
And when all eyes are focused on the tense relations between Argentina and Brazil regarding Mercosur, on the other hand another possible great obstacle appears: Paraguay.
The Southern Cone country, which will assume the rotating presidency of Mercosur this week, has shown signs of leaning against the agreement.
Paraguay says it will not negotiate the Mercosur agreement with the EU during its presidency of the bloc
The president of Paraguay, Santiago Peña, told local media on Monday, December 4, that some European nations are imposing too strict environmental requirements on the agreement.
“We are already looking in another direction,” said Peña.
“Environmental issues are what dominate the trade discussion, and we believe that this is due to the lack of understanding about our development model,” Peña said, adding that European nations are “trying to impose measures that we believe are not suitable for our own development.
While the agreement with the EU is on hold, Mercosur is advancing on its path and plans to sign a trade and investment agreement with Singapore, this Thursday, December 7 in Rio de Janeiro. This is the first document of this type by the South American group in 12 years, and the first with an Asian country.
With Reuters and AP.
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