Last Wednesday (26.07.2023) the webinar “Agreement between the European Union and Mercosur: the stones in the road", an initiative of the Elcano Royal Institute, the Fernando Henrique Cardoso Foundation and the Centre for Integration and Development Studies (CINDES) with a view to facilitating dialogue and advancing along the path of strategic relations.
On this occasion, the first to present the general aspects of the Agreement between the EU and MERCOSUR was Sandra Poland Rios, Director of CINDES, a think tanks focused on Brazil's economic policies and sustainable development. He began by explaining the structure of the negotiations that allowed the two blocs to reach an understanding in June 2019 after twenty years. "The current architecture responds to the prevailing free trade models in the world," he said.
Rios then referred to the liberalization of trade in goods and the schedule for tariff reductions; and stressed that beyond the commercial aspects, the agreement would help modernize the rules of MERCOSUR. He pointed out, in this regard, that the agreement is an opportunity for the Common Market to advance on two parallel paths: first, to open itself to the "international context," and second, to move toward "deepening within the bloc."
However, there are difficulties. In 2021, the European Union launched a package of political initiatives aimed at an ecological transition, which resulted in environmental demands that the Brazilian government does not seem willing to comply with, considering them excessive. In addition, President Luiz Inácio Lula da Silva expressed disagreement with the terms of the agreement in the area of government procurement.
In the webinar, Pedro Motta Veiga, also Director of CINDES, spoke from the perspective of such identified obstacles. He analysed the current position of each MERCOSUR member to conclude the agreement with the EU, while considering a "negotiating tactic" or a "deeper rejection" of Brazil's criticism.
Jose Juan Ruiz, President of the Elcano Royal Institute, a prestigious Spanish institution, was the third participant. “Sometimes we forget how difficult the agreement we are trying to close is,” he specified.
He highlighted the extraordinary effort to overcome the difficulties so that the agreement between the EU and MERCOSUR comes to fruition. He also presented one of the most relevant concepts: "Difficulties can be overcome if incentives are put on the table."
With this in mind, Ruiz, who has also been an economist at the Inter-American Development Bank, explained four types of elements that Europe can capture from Latin America: political, economic, geopolitical and production of global public goods.
Ruiz then pointed out a crucial condition: “For me, the most important restriction is that, after 30 or 40 years of globalization, our societies have learned that openings are not free. It is necessary to have a compensation mechanism because otherwise societies that are already polarized will become even more fragmented.”
"This is a real bottleneck, to which is added the uncertainty about what happens if the Association Treaty between the EU and MERCOSUR is signed. Where is the institution for its application in a world where negotiations are increasingly bilateral or where multilateral arbitration negotiations are paralyzed? Therefore, the political agreement between the two blocs could smooth out this issue," he said.
In this regard, Ruiz proposed "reviewing the favorable points that Latin America could contribute to Europe and the world, and vice versa, to be more prosperous."
Then Carlos Malamud He gave his view as a senior researcher at the Elcano Royal Institute. He said that "if the agreement is closed, the European Union would have a treaty with almost all Latin American countries, with the sole exception of Bolivia and Venezuela."
He added: "Even if it is not a desired objective, the EU-MERCOSUR agreement could also lead to greater integration in Latin American history."
If the EU-MERCOSUR Association Agreement is ratified, the EU would have free trade agreements with 94% of the region's GDP. How could this be achieved? the Doctor of American History asked.
He referred to the latest report by the Elcano Royal Institute entitled "Why does Latin America matter?" which highlights that, if these countries were to weave together existing bilateral trade agreements with the EU – for example, Harmonizing standards, rules of origin and customs procedures– would see a partnership between the EU and Latin America involving 1.100 billion people with a total GDP of over $22.000 billion, similar to that of the US economy and larger than that of China.
This is how the seminar coordinated by the political scientist closed Sergio Fabio, Director of the Fernando Henrique Cardoso Foundation, a Brazilian entity that clearly defines itself by the qualified debate of ideas.
Recommendations for further investigation into the topic:
- A video. The webinar “European Union-MERCOSUR Agreement: Obstacles in the way” can be found here here. (Portuguese)
- A studyThe document Why does Latin America matter? prepared by the Elcano Royal Institute is available here
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