The negotiations of the trade agreement between the European Union (EU) and Mercosur, which began almost 25 years ago, were closed this Friday, after a handshake between the president of the European Commission, Ursula von der Leyen, and the leaders of the South American bloc during a summit in Montevideo.
The agreement, which will reduce tariffs for a market of more than 700 million people on both sides of the Atlantic Ocean, it still has to be approved by the Parliament and Council of the EU and by the congresses of the countries of the South American group, of which Brazil, Argentina, Paraguay, Uruguay and, imminently, Bolivia are part .
Long negotiations
The discussions began in 2000, but they ran aground shortly after and it was not until 2019 that the parties They reached a comprehensive preliminary agreementwhich ranged from tariffs and health standards to intellectual property rules.
After signing the preliminary agreement, negotiations stalled again given the concern of European partners about the bloc’s environmental standards and the role of agriculture in deforestation, especially in Brazil, then governed by the far-right Jair Bolsonaro (2019-2022).
An environmental annex to satisfy the EU
The new agreement presented this Friday includes an annex to the chapter on Trade and Sustainable Development, following the push by European negotiators to include greater guarantees of environmental protection.
The annex proposes that the signatory countries cooperate for the implementation of international treaties to combat climate change, such as the Paris Agreement, and implement actions to promote sustainable products.
Transfers to Mercosur
The Mercosur countries, in turn, they managed to soften some parts of the old agreement that they considered harmful in terms of government purchases and the opening of the automotive sector.
The settings purchases made by the public health sector are excluded from liberalization and they preserve the Government’s possibility of purchasing technological products from the region as a way to encourage the sector.
Furthermore, the elimination of tariffs for electric vehicles will occur over a longer period of 18 years, compared to the 15 provided for in the preliminary agreement, and a mechanism is included that allows the reduction of tariffs to be suspended for three years and in an extraordinary manner.
European division
The discussions have faced strong opposition from French authorities, pressured by protests by farmers denouncing the alleged “unfair competition” which would mean the entry of Mercosur products.
The French president, Emmanuel Macron, has kept the pulse until the end and, while Von der Leyen traveled to Montevideo, the Elysée indicated that the president had contacted her to express his rejection of the agreement, considering it “unacceptable in its (current) state.”
On the other hand, the governments of Spain and Germany have supported the signing of the document by the economic growth that it can entail.
“Spain will work so that this agreement is approved by a majority in the (EU) Council,” wrote this Friday the president of the Spanish Government, Pedro Sánchez.
Brazil boost
Within the South American bloc, the Brazilian president, Luiz Inácio Lula da Silva, has been the main driver of the agreement, to which it gives first-order importance to promote the country’s agricultural exports.
Faced with French rejection, Lula has defended the quality of Brazilian meat and last week he said that Macron “doesn’t matter” because Von der Leyen is in charge of negotiating the agreement.
At the same time, the Brazilian president has aimed to reduce deforestation rates in the Amazon during his mandate to try to calm European concerns.
Impact of the agreement
The agreement, if it comes into force, It will be the largest trade agreement ever ratified by both the EU and Mercosur.
The EU was in 2023 the second largest trading partner of Mercosur, behind China and ahead of the US, accounting for 17% of the South American bloc’s imports with a value of 55.7 billion euros (about 59 billion dollars), mostly machinery and chemical and pharmaceutical products. .
Meanwhile, last year, Mercosur was the EU’s tenth largest trading partner, with exports valued at 53.7 billion euros, mainly minerals and agri-food products, according to Commission data.
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