A free trade agreement between the European Union (EU) and the Mercosur bloc of South American economies, consisting of Argentina, Brazil, Paraguay, and Uruguay, is expected to be finalized by the end of the year, according to European Commission President Ursula von der Leyen. During a meeting with Brazilian President Luiz Inacio Lula da Silva, she expressed optimism that the deal was “within reach” and that the remaining differences were currently being resolved.
The focus of the discussion was on enhancing connectivity between the people and businesses of the EU and Mercosur, as well as reducing risks, strengthening supply chains, and modernizing economies in a way that promotes inclusivity and reduces inequalities. Von der Leyen emphasized the importance of finalizing the agreement, stating that it would open up opportunities for both regions and committing to investing up to €45 billion ($50.6 billion) in Latin America and the Caribbean by 2027, with a particular focus on green energy.
President Lula da Silva reaffirmed Brazil’s commitment to concluding the trade deal but stressed the importance of achieving a balanced agreement without unreasonable environmental demands. He highlighted Brazil’s commitment to zero deforestation in the Amazon by 2030 and emphasized the need to consider the livelihoods of the 50 million inhabitants in the South American Amazon.
The negotiations for the EU-Mercosur trade deal began in 2000 but faced setbacks due to the EU’s demands for additional guarantees on deforestation and labor rights from the South American countries. There were concerns that the deal would incentivize Mercosur farmers to clear Amazon forests for agriculture, particularly soybean cultivation and cattle grazing for export to the EU. Additionally, there were concerns within the EU about the impact of cheaper imports from Mercosur on European farmers.
Mercosur is currently working on a counterproposal to address the EU’s environmental demands, which it plans to submit in the coming weeks. The agreement would mark a significant milestone in economic cooperation between the EU and Mercosur, facilitating increased trade and investment flows between the two regions.
In closing, the successful finalization of the EU-Mercosur trade agreement would bring numerous benefits to both parties, including expanded market access, economic growth, and greater cooperation on sustainable development. It remains to be seen how the remaining differences will be resolved, but the commitment by all parties involved suggests that a mutually beneficial agreement is within reach. The completion of the deal would be a testament to the potential of international trade agreements in fostering economic prosperity and promoting inclusivity.
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