Hopes for a Mercosur-EU trade agreement dissipate again before the summit in Brazil

Hopes for a Mercosur-EU trade agreement dissipate again before the summit in Brazil

SAO PAULO (AP) — The heads of state of Mercosur, the South American trading bloc, will participate on Thursday in a summit in Rio de Janeiro that will almost certainly once again disappoint countries hoping to sign a long-delayed agreement with the Union European.

Negotiations with the EU will be the main topic on the agenda and the host, Brazil, hopes for their quick conclusion. But the outgoing government of Argentina — the bloc’s second-largest economy — has said it opposes the pact, although the president-elect, the far-right Javier Milei, who will take office on Sunday, has expressed support for it.

The president of Brazil, Luiz Inácio Lula da Silva, defends an agreement that has been in the works for two decades. His main partners have been Spain, which holds the rotating presidency of the EU, and Germany.

Paraguay and Uruguay are also part of the bloc and Bolivia’s incorporation is expected to be announced on Thursday.

A trade agreement between Mercosur and the EU would mean the integration of a market of more than 700 million people, around a quarter of the global Gross Domestic Product and about 100 billion dollars annually in bilateral trade in goods and services. It would also reduce customs obligations and facilitate access for agricultural exporters to the European market, as well as for European manufacturers to Mercosur countries.

“When I was a negotiator in 2010, we thought it would be finished in two years,” Welber Barral, who represented Brazil at the time, told The Associated Press. The Rio summit is another missed opportunity, he said, adding that “this delay is very bad for everyone. If the deal fails, there could be blame-shifting that doesn’t help anyone.”

The two blocs reached a basic agreement in 2019 that was to be the first step towards a total one. But it was never implemented due to stiff resistance on both sides of the Atlantic, including calls for environmental protection in South America and concern from some European countries, especially France, about the arrival of cheap products.

The reluctance of the current Argentine government, which warned that its manufacturing and agricultural exports would be negatively affected, also slowed progress. Milei harshly criticized Mercosur in the past and repeatedly called for its elimination during the November presidential campaign, but she has not made such statements since then. In fact, her government has indicated that she wants the agreement to be completed.

But the alliance is unlikely to be formalized this year, or even next, due to the 2024 European elections, said Barral, who now works at the Brasilia-based consulting firm BMJ, specializing in government relations and international trade.

“Even if this agreement were approved today, there would be a legal review, translation into all EU languages, approval by all its parliaments, ratification and only then would it be valid,” Barral said. “An optimistic vision would be for it to be completed in five years.”

Argentina is not the only obstacle in South America. Paraguay, which takes over from Brazil as president this week, also appears to have resigned.

Lula “has made a superhuman effort,” said the country’s president, Santiago Peña, in an interview with local television station GEN on Monday. “The problem is that, on the other side, there is no interest.”

The Paraguayan president highlighted that European negotiators are not willing to recognize compliance authorities in Mercosur countries and, instead, want to carry out their own evaluations. This, he noted, would be a violation of sovereignty and, as such, a condition that sabotages possible progress.

“We are already looking in another direction,” Peña added, indicating that Mercosur will sign a free trade agreement with Singapore this week.

The bloc is also seeking deals with Canada and South Korea, and analysts say another with Indonesia is being considered.

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Politi reported from Buenos Aires, Argentina.

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