Negotiations for a free trade agreement between Mercosur and the European Union (EU) are capsizing in the midst of a new storm. In 2019, on the 20th anniversary of the start of the dialogue between the blocks, an agreement was signed that four years later is a dead letter. The EU has added new environmental requirements that were rejected on Tuesday by the two large economies of Mercosur, Brazil and Argentina. Criticism from their partners exasperates the Uruguayan authorities, who unsuccessfully pressure the bloc to move forward with Europe, on the one hand, and China, on the other, under the persistent threat of breaking up Mercosur if the current paralysis continues.
The new stumbling block is the document presented by the Twenty-seven in March, which includes environmental requirements related to imports from the agricultural sector, one of the economic engines of the countries that make up Mercosur: Argentina, Brazil, Paraguay and Uruguay.
“It presents us with a partial vision of sustainable development,” warned the Peronist Alberto Fernández at the summit of Mercosur heads of state held this Tuesday in the Argentine city of Puerto Iguazú, on the border with Brazil. For the host of the meeting, the European proposal is “excessively focused on the environment, with no record of the three dimensions of sustainability: environmental, economic and social”.
The Brazilian Luiz Inácio Lula da Silva was even more critical than his Argentine counterpart. “It is unacceptable. Strategic partners do not negotiate on the basis of mistrust and the threat of sanctions,” said the Brazilian president. Lula, who assumes pro tempore president of the bloc for the next six months, stressed that the members of Mercosur are not interested in agreements that condemn them “to the eternal role of exporters of raw materials, mining products and oil.”
Statements can be the expression of great discomfort, but also a negotiating strategy. Lula knows that the coincidence of a presidency of Brazil in Mercosur and of Spain in the EU open up a six-month window of opportunity that both countries want to take advantage of.
internal differences
The disagreement with the EU is aggravated by the internal fight led by the Uruguayan head of state, the conservative Luis Lacalle Pou. Since he came to power, in 2020, Lacalle Pou has defended the need to make Mercosur more flexible to open the door to bilateral trade negotiations with third countries, a possibility today vetoed by the internal regulations. The Uruguayan president asked to clear the obstacles that persist in the negotiations with the EU to restore credibility and trust in the bloc and also advance in a free trade agreement with China, one of the major importers of food produced by Mercosur.
“We are not stupid, it is better to go together. The immobility is what worries us”, the Uruguayan president put on the table before warning that if they cannot reach a consensus en bloc they will do so unilaterally.
Contrary to Mercosur rules, Uruguay carried out a feasibility study for a bilateral free trade agreement with China and began talks with the Asian giant. However, the authorities in Beijing put a brake on Uruguayan ambition in April by announcing that they preferred to move forward jointly with all of Mercosur.
Criticism of Venezuela
The discrepancies surfaced again with Venezuela. The president of Paraguay, Mario Abdo Benítez, joined his counterpart from Uruguay to demand a joint condemnation of the disqualification of the presidential candidacy of the opposition María Corina Machado in Venezuela.
“This is a fact that clashes head-on and scandalously with the clear letter of human rights,” said Abdo Benítez in reference to Machado’s disqualification. The Paraguayan president pointed out that restrictions on political rights through administrative channels “must always be viewed with suspicion and considered legally invalid.”
“Mercosur has to give a clear signal for the Venezuelan people to head towards a full democracy that they do not have today,” Lacalle Pou, the last of the four heads of state of the bloc to speak during the summit held in Puerto Iguazú, seconded. . By way of response, Fernández pointed out that he is committed to dialogue and not to interference in other countries.
The meeting ended with a communiqué signed only by Argentina, Brazil and Paraguay. Lacalle Pou was opposed to initialing his signature in the joint document Uruguay did not sign the joint communiqué and issued one alone in which he stressed the need to modernize the bloc and review the instruments of international insertion “with a pragmatic and flexible approach to face the challenges of a changing world scenario”.
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