The EU-MERCOSUR agreement is not just a trade agreement, but also a symbolic representation of cooperation between the Northern and Southern hemispheres.
The website Gisreportsonline recently published an article about the European Union (EU) and the Southern Common Market (MERCOSUR) negotiating a Free Trade Agreement (FTA) for over two decades, and the possibility of both sides soon agreeing on the FTA despite remaining obstacles.
Opening the doors to cooperation.
Accordingly, FTA negotiations between the EU and Mercosur have been ongoing since 1999, with the draft agreement signed in 2019, but it remains stalled to this day.
Argentina, Brazil, Paraguay, and Uruguay established MERCOSUR in 1991 through the Asuncion Treaty, with the goal of promoting free trade and the free flow of goods, people, and capital among member states. This initiative followed the democratization processes in South America and was seen as a way to strengthen economic and political ties in the region.
In 2024, the Bolivian Senate voted to approve the protocol for the country to become a member (Venezuela was also a full member, but its membership has been suspended since December 2016).
Throughout the 1990s and early 2000s, MERCOSUR made significant progress in reducing tariffs and promoting economic integration among its member states.
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| MERCOSUR is a historic achievement in the region and one of the key milestones for Latin American economic integration. Photo: Rio Times |
Although MERCOSUR has signed numerous trade agreements with countries such as Egypt, India, and Israel, it has yet to reach free trade agreements with the world's largest economies: the United States, China, and the EU.
Negotiations for a trade agreement between MERCOSUR and the EU began in 1999, and were among the longest in recent history. The goal was to create a comprehensive free trade agreement encompassing not only goods and services, but also investment, public procurement, and intellectual property rights. Both sides saw potential benefits.
For Mercosur, it means increased access to the EU's large consumer market and advanced technology, while for the EU, it means expanding opportunities in developing South American economies. In Mercosur countries, an FTA with the EU could bring tangible economic benefits and encourage further economic and political integration, strengthening Latin America's position in global affairs.
However, negotiations faced difficulties due to opposition from European farmers concerned about cheap imports from Latin America, as well as environmental concerns. Meanwhile, in South America, there were concerns about the impact of the agreement on local industries, and the FTA was unlikely to gain support from free trade skeptics.
Forced to seek other regions to pursue free trade agreements, the EU has signed formal agreements with two Latin American groups, the Caribbean Forum (Cariforum) and the Central American Association, a multilateral trade agreement with three members of the Andean Community (Colombia, Ecuador, and Peru), and bilateral agreements with Chile and Mexico.
If ratified, the EU-MERCOSUR agreement would create a market with over 750 million consumers – nearly 10% of the world's population – and almost 20% of global GDP. In terms of population, it would also be the largest trade agreement ever reached by both the EU and MERCOSUR.
Specifically, this FTA eliminates tariffs on more than 90% of MERCOSUR's exports to the EU, allowing increased access to the European market for MERCOSUR agricultural products such as beef, poultry, sugar, and ethanol, while also benefiting EU producers looking to increase exports with tariff reductions on cars, auto parts, chemicals, machinery, and textiles. According to the European Commission (EC), this FTA could save €4.5 billion in taxes annually.
A potentially lucrative agreement.
Brazilian President Lula and EC President Ursula von der Leyen met at the United Nations in September and indicated they had resolved some differences in negotiations between the two blocs. Accordingly, ratification of the agreement appeared to be the most likely outcome.
The agreement could be passed partly thanks to a qualifying majority from at least 15 EU countries – which would then need to be ratified by the European Parliament – meaning that the lack of support from France and Austria (if any) would not pose a threat. Meanwhile, Paraguayan President Pena and even Argentinian President Milei could be persuaded to sign the agreement based on the trade possibilities that this FTA could open up.
Experts believe that the EU-MERCOSUR trade agreement has significant implications for global geopolitics. This agreement could boost trade flows, economic integration, and political relations between Europe and South America, potentially leading to increased cooperation on other global issues.
However, analysts say there is still a possibility that the agreement remains in limbo.
Considering the two decades of negotiations followed by five years of non-ratification, that status quo could continue. It's also possible that the presidents of the MERCOSUR member states failed to reach an internal decision on the agreement, thus delaying the issue until there is greater ideological consensus within the group.
Source: https://congthuong.vn/thoa-thuan-thuong-mai-eu-mercosur-gieo-mam-hop-tac-toan-cau-363991.html
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