China flies over a Mercosur embarked on a complex negotiation with the EU

Chinaone of the largest trading partners of the mercosurflies over the deliberations of the largest South American block that, embarked for years, in a complex commercial negotiation with the European Union (EU), now seems to be more open to internal debate on a potential agreement with the Asian giant.

Uruguay has long insisted on the need to sign a free trade agreement (FTA) with China -as a bloc or alone-, something that its partners in Mercosur have historically opposed: Paraguay for reasons of diplomatic strategy, and Brazil and Argentina, reluctant to open their markets to competitive Chinese manufacturers.

But in recent months, the internal tensions generated by this thorny issue have turned towards a more propitious scenario for the South American bloc to allow itself to open a debate on the alternative of exploring some type of trade agreement with Beijing.

In Mercosur, a bloc that will hold its biannual summit in Puerto Iguazú (Argentina) next Monday and Tuesday, trade agreements can only be negotiated with third countries as a bloc and not individually.

Faced with the refusal of its partners to open joint negotiations with China and also to make internal regulations more flexible so that Uruguay could seek an agreement alone, in July 2022 Montevideo decided to start talks with China anyway to close an FTA and, when the moment, sign it, even at the risk of leaving Mercosur if by then it did not have the endorsement of the rest.

STRATEGIC TURN

But in mid-April, a few days after a visit by the President of Brazil, Luiz Inácio Lula da Silva, to Beijing, it was China that turned this process around by telling the Uruguayan Foreign Minister, Francisco Bustillo, that it preferred to move forward. in the negotiation together with the rest of the Mercosur countries.

“When Bustillo traveled to China, they told him that the agreement is only made with Mercosur, that they are not going to risk conflict with Mercosur’s most important partners over this. So Uruguay, for now, is empty-handed.”Patricio Giusto, director of the Sino-Argentine Observatory, told EFE.

China adopted this position after taking note of expressions by the Brazilian president regarding his interest in advancing towards a Mercosur-China agreement once negotiations for a free trade agreement with the EU have been completed.

However, the conversations with the Twenty-seven are not easy. After two decades of arduous negotiations, in 2019 the EU and Mercosur reached a general political agreement, leaving some technical aspects pending. But that discussion was complicated by the appearance of new lawsuits on both sides of the table.

CHINESE ADVANCE

“China is the main promoter of an FTA with Mercosur. But in the critical situation of divisions that exist in the bloc at the moment, this is one of the hottest issues for debate and there is no agreement.”observed Giusto, for whom in the short term it is difficult to reach agreements with China and also with the EU.

Meanwhile, China is making progress in strengthening its ties with the South Americans.

Beijing has become a transcendental actor for Argentina, which China assists with financial aid at a delicate moment for the South American nation, where Chinese investments also underpin the development of key sectors, such as energy and lithium.

Brazil, meanwhile, is China’s largest trade partner in Latin America, also sharing a leading role in spaces of growing geopolitical weight, such as the BRICS, from where they fight for a multipolar order.

Even Paraguay, which does not have diplomatic relations with Beijing because it recognizes Taiwan, has significant trade with China. And even the Executive that the president-elect of Paraguay, Santiago Peña, will head as of next August, has shown interest in an eventual agreement between Mercosur and Beijing.

Last year Mercosur exported to China for 100,000 million dollars (92,000 million euros) and imported from that Asian market for 83,000 million dollars.

This represents a quarter of Mercosur’s total exports and a similar amount of its purchases, consolidating China as its largest trading partner, and leaving the EU in second place, with exchanges worth 120 billion dollars (global trade volume) in 2022. .

Source: EFE