Last attempts to close agreement Mercosur-EU fail

The window of time to conclude and sign the agreement of association between the European Union and Mercosur, which includes an ambitious agreement trade agreement, seems to have closed. Protests by farmers in EU countries are evidence of a malaise that their governments cannot widen by opening the floodgate to South American products. If several capitals, especially Paris, had already insisted on blocking the agreement, the French president was categorical in his visit in March to the main supporter of the text, Brazil's Lula da Silva. Macron asked to negotiate it "from scratch".

It was considered the most important trade agreement in the world. On June 28, 2019, after more than 20 years of negotiations, the Southern Common Market (Mercosur) and the European Union (EU) finally concluded a agreement of association between both supranational entities. Only a few details remained before the text was submitted to the parliaments of the respective countries for ratification. Since then, however, no progress has been made and the five years that have elapsed have left a document from which the different governments are increasingly distancing themselves.

The agreement of association envisaged three pillars. The main and most difficult to reach a consensus on, and the one on which negotiations have run aground, is the trade aspect; the other two -political dialogue and cooperation- present fewer problems. subject It is possible that, in the case of the first point, some convergence between the two blocs could be promoted separately on the other two points, although result would fall far short of aspirations.

At the time, the trade pre-agreement was greeted with great acclaim. It was to become the largest free trade agreement in the world, involving 31 countries. These countries accounted for 720 million people and approximately 20% of the world's Economics . To these figures must be added Bolivia, which recently joined the club formed by Brazil, Argentina, Uruguay and Paraguay plenary session of the Executive Council .

At the time of the pre-agreement, the then Brazilian President Jair Bolsonaro estimated a GDP increase of almost $70 billion over 15 years for his country. To this was added an exponential growth of around $78 billion by 2035 in Brazilian exports to the European Union. But the Brazilian president's malpractice with regard to the Amazon prompted Europe, in a move led by France, to add environmental demands to what was signed in 2019, which stipulated sanctions for countries that did not meet the climate targets proposed in the Paris Agreements.

Seen by many observers as an excuse - at least as something that distracted from the main French reluctance, centered on the impact that agreement could have on its agricultural sector - the environmental issue occupied the public discrepancies expressed from Europe.

The now President Lula da Silva has made the preservation of the Amazon a focal point of his presidency. He has developed efforts such as relaunching his Action Plan for the Prevention and Control of Deforestation in the Amazon or the use of state-of-the-art technology for the control and preservation of thousands of hectares of forest. And although since his arrival in Brasilia, the loss of trees in the Brazilian Amazon has been reduced by 39%, France continues to demand environmental guarantees.

Lula's return had actually been interpreted as the impetus that the agreement Mercosur-EU needed to finally be successfully closed. The Brazilian leader himself took the rotating presidency of Mercosur that was to last until 2023 as the great opportunity to do so, and did everything possible to ensure that the summit that group was to hold at the end of the year would be the scenario for the advertisement of the definitive agreement . This was not possible and the process was symbolically concluded at the visit that the French president, Emmanuel Macron, made to Brazil in March 2024. "The agreement with Mercosur is a terrible agreement as it is being negotiated now. This agreement was negotiated 20 years ago. I do not defend this agreement. It is not what we want," said Macron, who proposed to renegotiate everything "from scratch".

Cross concerns

The main concern expressed on both sides of the Atlantic in the negotiations over the years has to do with where the other side seems to have an obvious advantage. Mercosur is an agricultural power that can flood the European market with cheaper products that are not subject to the standards that the EU obliges its farmers and stockbreeders to apply. On the other hand, European industrial products, with advanced technology and high added value, can corner South American manufactures in their own markets if tariffs are eliminated or substantially reduced.

In addition, there are, on the one hand, environmental legislation and labor standards, which are less demanding in South America and which must be applied in the European production sectors; on the other hand, the certifications and technical standards that South American producers will be obliged to incorporate if they wish to sell in the EU, or the cancellation of certain local protections - in the industrial field or public tenders - that are currently applied by South American governments with more closed economies, especially Brazil and Argentina.

In any case, the most contested aspect is agriculture, because of the social mobilization that could lead to a worsening of the living conditions of European farmers. Agricultural policy has always been a core issue in the EU. In countries such as Spain and Portugal the risk has been minimized politically by the desire for greater economic links with Latin America, but other countries such as Ireland and Poland, as well as the more combative France, have expressed their concern. Protests in recent months by farmers in several European states - not motivated by the prospect of agreement with Mercosur, although the issue has been explicitly mentioned in some marches - have paralyzed any attempt at a final rapprochement with Mercosur. This has been recognized by Argentina and Paraguay.

Although the election of Javier Milei put in the Casa Rosada someone more open to free trade than the previous Peronist government had been, his government is already adapting to the new status. The Argentine Foreign Minister, Diana Mondino, has stated that it may be necessary to opt for a split negotiation of agreement, seeking consensus in specific areas, leaving aside trade and betting on the other two pillars: cooperation and political dialogue. status "I do not know if it will be possible to find something optimal and that will make all parties happy, and perhaps we will end up having to split into several pieces what could have been a comprehensive agreement ", Mondino pointed out in a visit to Paris in February, visit .

A factionalized approval would simplify the procedures, since the trade pillar could be C directly by the EU without the need for ratification by national parliaments (which is obligatory for the other two pillars), but this does not mean that trade negotiations would be easier, since the objections raised by Europe would remain in force.

The President of Paraguay, Santiago Peña, who heads this year's Mercosur, has indicated that his country already prefers to put aside that signature not reached with the EU in order to focus its efforts on possible trade agreements that could go ahead. Without officially wanting to turn the page completely, the group intends to give priority to negotiations with the association European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland and Liechtenstein, or the United Arab Emirates. Negotiations are also active with Canada, Japan and South Korea.

For its part, Uruguay continues to feel out trade relations with China, completely ignoring the commitment of Mercosur member states to negotiate jointly with external countries, something that has been frustrating President Luis Lacalle Pou.