Italy-Argentina Forum, Importance of EU-Mercosur Agreement

Negotiations on a free trade agreement between the EU and Mercosur (the single market of South America, including Brazil, Argentina, Uruguay, Paraguay) continue. European Commission Vice-President Valdis Dombrovskis explained this, although “the conditions for an agreement have not yet been met.” In fact, the agreements were put on hold after the farmers’ revolt that has erupted in Europe in recent weeks. Among the hesitations of European Union governments, in fact, is one that has to do with cheap agricultural commodities that could “invade” European markets, causing further discontent in the agricultural world already at war. On the South American hand, it is difficult to accept some requests from Brussels that are considered too strict, primarily related to adapting to the strict rules of the Paris Agreement regarding CO₂ emissions. The same applies to labor market standards, which the EU would like to align with those of the International Labor Organization (ILO).

Negotiations began 25 years ago, in 1999, and a general agreement between the EU and Mercosur had already been reached in 2019, but the treaty was never finalized. Before the European elections (June 6-9, 2024), it will be difficult to “square the circle.” “The ideal situation would be to finalize all this before the European elections. This is no longer possible,” Nils Schmid, a member of the German parliament, explained to Euractiv France.

But the agreement can bring numerous mutual benefits, as was emphasized during the Italy-Argentina forum, which took place on the sidelines of President Javier Milei’s visit to Italy.

The forum was attended by the foreign ministers of Italy and Argentina, as well as more than 100 entrepreneurs from the two countries. According to Eurostat data published by Italian economic newspaper Il Sole 24 Ore, the EU imports 63 billion worth of goods from Mercosur compared to 55 billion worth of exports. The numbers with a huge growth potential.

“The entry into force of the EU-Mercosur agreement will organize the largest free trade area ever created by the European Union, with a population of 780 million people,” explains Raffaele Langella, CEO of Confindustria, in an interview with Il Sole 24 Ore. “All European Confindustries are in favor of its entry into force, including the countries whose governments are slowing down the progress of this negotiation process.” Langella also explains that the agreement will be important particularly for improving security of supply “within an open strategic autonomy,” which will facilitate reaching the community’s goals and “leave no room for competitors who are already very active in global scenarios and who have further strengthened their presence in the region over the past few years.”