EU and Mercosur, more than 20 years in pursuit of an agreement to create a free trade area

The summit that will bring together the heads of state of the countries of Mercosur this Thursday in Rio de Janeiro It comes more than four years after this bloc reached a free trade agreement in principle with the EU that, however, has remained blocked since then.

On June 28, 2019, the European Union (EU) and Mercosur achieved in Buenos Aires, after twenty years of negotiations, a free trade agreement in principle for a market of almost 800 million people.

However, ratification has since been blocked by the veto of several Union countries, including France, which demands guarantees from the South American bloc in environmental terms and respect for European food safety rules.

The history dates back to 1995 when both blocks signed the Interregional Cooperation Framework Agreement in Madrid, the first between two customs unions.

The links with Mercosur were already very solid. In fact, all member countries (Argentina, Brazil, Paraguay and Uruguay, in addition to the first associates, Bolivia and Chile) had signed third generation agreements with the EU and benefited from community programs to promote business ties.

The objective in the first part of the process was to strengthen political, economic, business, cultural and scientific ties in order to, in a second phase, liberalize trade exchanges through harmonization and homologation between the two areas, in accordance with WTO rules.

The agricultural chapter was from the beginning the most conflictive of the negotiations.

In the spring of 2000, Mercosur and the European Union began negotiating a free trade area in Buenos Aires to eliminate tariffs, restrictions and regulations, and since then almost thirty negotiating rounds have been held in a complex process that has had slowdowns. several years.

The EU has traditionally been Mercosur’s first trading partner and trade in goods between both areas amounts to more than 80,000 million euros (US$ 74,074 million), according to the European Commission.

Mercosur is made up of Argentina, Brazil, Paraguay and Uruguay and Bolivia, Chile Colombia, Ecuador, Guyana, Peru and Suriname appear as associated states. Venezuela has been suspended since August 2017.

In July 2004, talks between the EU and Mercosur came to a standstill when the South American bloc forced the suspension of a round of negotiations because it considered the European agricultural supply frustrating, and since then they have moved forward in fits and starts.

Throughout the process, both parties have mutually demanded prior concessions before improving their offers on those issues of greatest interest to the other: access to the European agricultural market in the case of Mercosur; and the business possibilities in the Southern Cone for European services and finance companies, in the EU.

In March 2012, the negotiation of an association agreement was resumed in Brussels and in January 2013 the Mercosur countries announced their commitment to present their first commercial offers for access to the EU market by October of that year.

In November 2017, the foreign ministers of the American bloc delivered a comprehensive proposal to the vice president of the European Commission to reach the agreement.

The negotiations continued in 2018 until the final signing of the agreement in March 2019 in Buenos Aires, whose ratification has since been blocked by the veto of several countries, including France, which demands from the South American bloc guarantees in environmental terms and respect of European food safety rules.

The European Commission proposed at the beginning of 2023 an annex to the agreement already negotiated in 2019, in order to incorporate a new EU regulation that forces companies to verify the legal origin of imports, something that was flatly rejected by the president. Brazilian, Luiz Inácio Lula da Silva, who serves as president pro tempore of Mercosur.

Mercosur has shown interest in renegotiating the part of the agreement referring to government purchases in search of “more balanced commitments.”

On the eve of the summit this Thursday, the president of France, Emmanuel Macron, has added more uncertainty with his statement last Saturday that the agreement “It’s not good for anyone.”but the European Commission, which is in charge of negotiating EU trade agreements, reaffirmed on Monday, December 4, its willingness to close the negotiations as soon as possible.