EU – MERCOSUR Agreement Signing Still Delayed

The agreement between the European Union (EU) and the South American Common Market (MERCOSUR) is unlikely to be concluded within a year, as both sides had hoped.

The treaty has been suspended since 2019, when a general agreement was reached, then steps towards final ratification proved more difficult than expected, and now, the new Argentine government of Javier Milei is slowing things down. On November 22, the European Union signed a free trade agreement with New Zealand, which provides for removing 100% of New Zealand’s tariffs on EU exports and 98.5% of EU tariffs on imports. Once this happened, attention turned to the expected agreement with the MERCOSUR countries (Argentina, Brazil, Paraguay, and Uruguay), but the “white smoke” expected this week will not happen.

The new government of Argentina wants to study this issue, and the new cabinet will take office only on December 10. European Commission trade representative Valdis Dombrovskis has canceled a trip to Brazil planned for December 7 to negotiate the trade agreement, as the prospects for concluding it within a year have significantly decreased, explains the Financial Times.

The agreement has been blocked by EU requests, particularly regarding commitments to protect the Amazon and combat climate change. Added to this are some concerns, including those of French President Emmanuel Macron, regarding the protection of European farmers.

“I am against the MERCOSUR agreement with the European Union. This agreement is completely contrary to what (Lula – ed.) is doing in Brazil and what we are doing. This agreement, which was signed 20 years ago and which we tried to fix, was fixed badly,” Macron explained, as reported by the Financial Times.

What is certain is that in the current international situation, Europe especially needs trade-friendly agreements, and the agreement with MERCOSUR in particular will be worth €4 billion of tariff removals and become the largest agreement of its type ever signed by the EU.

The European Commission announced that negotiations were in progress and moving forward “with the intention of concluding them as quickly as possible.” But with 2024 just around the corner and European elections next June, there is a risk that the new European leadership will have to start all over again.