Twenty -five years in this position, the prominent agreement eliminates the customs tariff on more than 90 % of goods while reshaping the trade relations of South America.
After negotiations began after negotiations, Mercosur, a trade bloc in South America, whose main members were Argentina, Bolivia, Brazil, Paraguay, Uruguay, signed a trade agreement with the European Union (European Union). The deal against the grains in the era of increased protectionism and the high disposal of.
“This agreement is not just an economic opportunity, it is a political necessity,” said Ursula von der Lin, President of the European Commission at the Mirosor Summit in Montevideo. “I know that strong winds come in the opposite direction, towards isolation and fragmentation, but this agreement is our near response.”
The deal is the largest inheritance in the European Union ever and the first major commercial partner.
“European products (MERCOSUR) will enter into much better conditions than American or Japanese products,” Federico Steinberg, a colleague at the Center for Strategic and International Studies in Washington, DC, wrote in a paper published on December 6. By eliminating the tariff on more than 90 % of the goods.
The agreement has two parts. One covers goods, services, public purchases and intellectual property, with a focus on commercial issues such as definitions, with attention to cars, agriculture and critical minerals.
“Increased uncertainty in political geography” has sparked interest in rare ground minerals, “says Charlotte Emil, an economist at the Center for Future Studies and International Information (CEPII).
The second part of the agreement addresses wider topics, including human rights and the environment. Along with another trade agreement in the European Union 2024 with New Zealand, it opens a new ground by referring to the Paris Agreement on Climate Change, which is remarkably acceptable details by Argentine President Javier Miley, a global skeptical.
What is mecosur and why does it matter?
With the total GDP of about 3 trillion dollars, the four main members of Mercosur-pre-“Market South South Common Market” in Spanish-will get the fifth largest economy in the world. About 300 million people live in an area of about 15 million square kilometers. The gross domestic product number does not include Bolivia, which has been approved for membership but in a four -year “implementation period” on board.
The European Union was already the second largest trade partner in Mercosur two years ago for goods, which represents 16.9 % of the total trade, and is behind China but defeated the United States, according to the European Commission. The European Union exported the goods of 55.7 billion euros to Mercosur that year, with 53.7 billion euros in the other direction.
Described in the name of the emerging European Union in the south when it was founded in 1991, Mercosor has yet to develop beyond the incomplete customs union. The four indigenous Venezuela added in 2012 only to be suspended in 2016 to violate political standards; Bolivia rose to full membership last year. Sorinam, Guyana, Colombia, Ecuador, Panama, Peru, and Chile are the related states; They will not be officially affected by the European Union and Morsi deal.
The regional trade between the four founders jumped four times to 16.9 billion dollars between 1990 and 1996, according to the Development Bank between Americans, but real integration has proven out of reach. Internal trade remained only 10.3 % of the global total in 2022, according to the data of the Economic Summary Observatory, which is an online database.
Why now?
The timing of the deal can be linked to the efforts made by the European Union to ensure the continuation of strong and varied trade in the face of protective measures by the United States under the leadership of US President Donald Trump, the growing role in China, and the death of the World Trade Organization (the World Trade Organization) as an effective international trade integration.
“In the past few years, the geopolitical situation has become more evident for the European Union,” says Maximiliano Marzetti, a professor of law participating in law, Ministry of International Negotiations and Conflict Management in China and the United States. The European Union needs new commercial partners in the climate of hostility to free trade and also to emphasize its importance on the international multi -poles. “
The history of the Mercosur-Eu negotiations dates back to more return: until 1999, during the “peak globalization” period, but it remained in a state of later until late in the Obama administration, when the United States began taking measures to weaken the World Trade Organization.
Looking at the World Trade Organization, bilateral and multilateral agreements have become more important, and the European Union launched a wave of activity. In Latin America, it added to agreements with the Andes community (Peru, Colombia, Ecuador) and Central America (Honduras, Nicaragua, Panama, Costa Rica, and El Salvador) as well as bilateral agreements with Chile and Mexico, both recently renewed.
“The European Union wanted to send a message to Trump,” says Ignacio Bartesaghi, Director of the International Business Institute at the Uruguay University of Uruguay, with the new Mercosur Agreement. “We know that you will be closed. We want to open.”
Mercosur, for its part, needed victory. Either it “closed a deal with the European Union, or will die,” says Partisagy.
All members are far from speaking with one voice, however.
The “capitalist” president, which is described by Argentina “capitalist”, Javier Millie, presented harsh words to Mercosur, even when he starts in a period of one year as one -year as President of the Pro Tempore Group. During a speech at the Mercosur summit, Milei described the bloc as “a prison that prevents member states from benefiting from their comparative advantages and export potential.”
A month later, in Davos during the annual meeting of the World Economic Forum, Miley Bloomberg told that he would give up Mercosor and the common external tariff, which anticipates side deals, for an agreement with the United States. “If the maximum condition is that, yes,” he said. “However, there are mechanisms that can be used, even being inside MERCOSUR.”
Uruguay also explores an independent deal with China. But “the negotiations have never started because of the Lula Because Mercosur together,” Partisagy notes.
Not these partial agreements solve all problems. The renewed bilateral deal with the European Union will not solve the problems of the assistant member in Mexico if it is exposed to the upper tariffs of its northern neighbor.
“Remember that the United States represents 80 % of Mexican exports and the European Union represents less than 5 %,” says Ashkan Khayami, the main analysts in Latin America at the BMI, a British multinational research company. “It is not really reasonable for the European Union to replace the United States as a type of major destination, or even a very important destination, for Mexican exports.”
What next?
Next comes the ratification. For mecosur, this is clear and direct. Legislative bodies must vote, but if one of them is shining, the agreement will continue to apply for those that agree to the deal. In Europe, however, the process is complicated by bureaucracy and political.
Before December, the French farmers ignored the Mercosur deal; A decision against the deal was made in the French Parliament. Politicians in Poland, Italy and the Netherlands, too, raise questions. But observers tend to chalk to the local situation.
Thanks to the above quotas, for example, “This is just a hamburger for everyone,” says Partisagy. Reporting a French general saying, “Mercosur is the tree that hides the forest,” Emlinger’s joke.
While the European Union has a sovereignty over trade, other treaty issues need the approval of member states. Consequently, supporters may try to divide the Mercosur text into two components, trade and others. The commercial section is supposed to be tracked quickly despite the European Parliament, as it will need votes representing 65 % of the ingredients. Other sections, including environmental issues, will take the longest road separately.
“The European Union is likely to choose, if possible, divide the certification process,” said Marzeiti.
