Historic EU-Mercosur Trade Agreement Reached After 25 Years of Negotiation
The European Union and the Mercosur group of Latin American countries have formally agreed to the terms of a long-anticipated free trade deal, as announced by European Commission President Ursula von der Leyen on December 6 in Montevideo, Uruguay. This agreement aims to establish one of the largest free trade zones globally, encompassing over 700 million people and nearly 25% of the world's GDP.
The EU-Mercosur deal is designed to lower tariffs and trade barriers, thus facilitating easier export of goods between the two regions. Mercosur comprises Brazil, which holds the largest share of the bloc's territory, economic output, and population, alongside Argentina, Paraguay, Uruguay, and Bolivia, the newest member. Venezuela's membership is currently suspended indefinitely.
Despite negotiations concluding, the agreement still requires approval from at least 15 of the European Union's 27 member nations, representing 65% of the EU's population. France has shown opposition to the deal, driven by protests from farmers who argue it would lead to unfair competition. President Emmanuel Macron has warned von der Leyen that the current agreement is unacceptable. Poland has joined France in opposing the deal, and the Italian government believes conditions are not yet suitable for support. The Netherlands and Austria have also expressed reservations.
In contrast, Germany has strongly endorsed the EU-Mercosur deal, eager to explore more trade opportunities amid challenges facing its manufacturing sector. Spain shares a similar pro-agreement stance.
In addressing fellow Europeans and perhaps addressing more skeptical stakeholders like farmers in France, von der Leyen emphasized the deal's positive impact, stating it would benefit around 60,000 companies that export to the Mercosur region through reduced tariffs, simpler customs procedures, and preferential access to essential raw materials. She assured farmers that robust safeguards have been included to protect their livelihoods.
The genesis of this agreement spans over 25 years, initiated during a summit in Rio de Janeiro in 1999. The negotiations encountered obstacles almost immediately, arising from differing economic priorities, tariffs, regulatory standards, and agricultural policies across the Atlantic. For ten years, the EU aimed to shield its agricultural sector while Mercosur sought to enhance access to its agricultural products.
Some progress was made after 2010, with both parties working towards tariff elimination despite ongoing agricultural disputes. A significant step forward occurred in June 2019 with a political agreement that outlined provisions for tariff reductions and commitments to environmental standards.
Since then, ratifying the deal has faced challenges, notably European concerns over deforestation in the Amazon during Jair Bolsonaro's presidency in Brazil, which lasted until the end of 2022. Luiz Inácio Lula da Silva, Bolsonaro's successor, initially opposed the agreement two decades back; however, upon reassuming office in 2023, his administration has actively sought advancement. Notably, the outgoing Argentine government opposed the deal, but President Javier Milei, who took office last year, has been supportive of it.
The conclusion of this agreement marks a significant milestone, and the hope is that it will open up significant business opportunities and strengthen economic ties between the European Union and the Mercosur bloc.
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