Ursula von der Leyen and Luiz Inácio Lula da Silva at a meeting in New York, September 2024. Photo: Ricardo Stuckert/PR.
After 25 years of negotiations, the Southern Common Market (Mercosur) and the European Union finally signed a free trade agreement. It was signed on Friday, December 6, at the Mercosur presidents’ summit in Montevideo, Uruguay, just seven weeks before Donald Trump’s inauguration as the US president.
Amid forecasts of a new era of trade restrictions upon the arrival of Donald Trump, many analysts agree that the EU is moving strategically to finalize the agreement to cover the trade loses that it might suffer, given Trump’s aggressive tone towards Europe. However, the agreement will need to be ratified by the parliaments of all EU member states in order to enter into force, something that may take quite some time.
The signing of the agreement took place during the 45th summit of the heads of state of Mercosur, where the host, Uruguayan President Luis Lacalle Pou received his counterparts from Argentina, Javier Milei; Brazil, Luiz Inácio Lula da Silva; and Paraguay, Santiago Peña. The president of Bolivia, Luis Arce, also participated in the summit, for the first time as a full member of the bloc.
The event was also attended by the head of the European Commission, Ursula von der Leyen, one of the driving forces behind the agreement, who met with the Mercosur heads of state and finalized the details of the rocky negotiation process.
Brazilian President Lula was also key in the negotiations. After Brazil faced objections from the governments of France and Italy during former President Jair Bolsonaro’s term, Lula asserted that the European Commission should be the one to take the decision. “Ursula von der Leyen has the power to seal this agreement and I intend to sign it this year,” he said during a forum on industry in Brasilia.
“A historic moment”
Von der Leyen said that, by creating a market of more than 700 million consumers, “this alliance will strengthen value chains, develop strategic industries, support innovation and create jobs and values for both sides of the Atlantic… Today is a good day for Mercosur, a good day for Europe and a historic moment. It means more jobs and better jobs, more choises and better prices.”
She added that the bond between Europe and the Mercosur countries “is one of the strongest in the world… We are strengthening this unique alliance like never before. In doing so, we are sending a clear and powerful message to the world, that this is not only an economic opportunity, but a political necessity.”
Tras 25 años de negociaciones, celebramos un acuerdo histórico para nuestra región: el acuerdo comercial Mercosur-UE. Una oportunidad única para Paraguay de atraer inversiones, fortalecer su competitividad y proyectarse al mundo con más fuerza. pic.twitter.com/jt4aHJaBmi
— Santiago Peña (@SantiPenap) December 6, 2024
Lacalle Pou, representing Mercosur, noted, “This is not just trade exchange … there are some elements with Europe that unite us beyond that.” He called the agreement an “opportunity” and a “vindication of the best policy.”
Long negotiation
This is an unprecedented agreement for both blocs and one of the most significant in global history. According to Mercosur estimates, it creates a market for goods and services for some 800 million consumers and almost a quarter of the world’s GDP.
On June 28, 2019, the EU and Mercosur reached an understanding in principle to have an Association Agreement with three pillars: political dialogue, cooperation, and trade.
In a global context of increasing protectionism, both blocs “are building a free trade zone and are committed to cooperation to promote economic growth, employment and investment, for the benefit of their people,” the FTA document highlights.
The alliance seeks to promote trade between the parties, customs cooperation, tariff liberalization and the strengthening of relations between the blocs.
The agreement contemplates the elimination of numerous tariff and non-tariff barriers. In particular, Mercosur and the EU will liberalize 91% and 92% of their imports respectively over a 10-year period.
France’s opposition
The French authorities categorically rejected the FTA, which had already faced widespread repudiation throughout the country.
The French government considers that the agreement will increase agricultural imports from South America, which, according to French farmers, would harm their domestic production.
The French government expressed its rejection on Thursday, December 5, through official communication channels. “The draft agreement between the EU and Mercosur is unacceptable as it stands,” the presidency of France stated in a brief statement published on social media. “President Emmanuel Macron has reiterated this today to the President of the European Commission. We will continue to tirelessly defend our agricultural sovereignty.”
German Foreign Minister Annalena Baerbock announced on Tuesday that the Mercosur summit could be the “last chance” for the European Union to conclude a trade agreement with the South American bloc.
As soon as the agreement was signed, one of the first to celebrate it was the prime minister of Spain, Pedro Sánchez, who described the agreement as “historic” and added that Spain “will work to ensure that this agreement is approved by a majority in the Council” so that “the commercial opening” that will make all participants “more prosperous and stronger” becomes a reality.
However, according to journalist Fabián Cardozo, European protectionism could be an obstacle to what Mercosur needs.
(RT) with Orinoco Tribune content
Translation: Orinoco Tribune
OT/JRE/SC
