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November 17, 2019

Europe negotiates free trade agreement with South American Mercosur Trade Bloc

EU trade agreementEurope opens its trade market to the world, countering the protectionist actions of US President Donald Trump. The High Representatives of the European Union (EU) will meet with the South American Mercosur Trade Bloc on January 30 in Brussels to assess the prospects for a free trade agreement that will follow trade agreements with Japan and Canada.

The negotiations between the EU and Mercosur began almost two decades ago and were resumed and re-launched in 2010. The EU was motivated to conclude negotiations last year, but last month they have slowed because of the discussion of politically sensitive issues like agriculture and cars.

“Our goal is to conclude a very ambitious trade agreement with Mercosur in the coming weeks”, said the EU Trade Commissioner Cecilia Malmstrom. “Our goal is to finalize it very soon because the clock ticks”, added she.

The authorities in the EU are looking to keep their markets open to the world, in the face of Donald Trump’s desire to fight globalization, and to highlight the bloc’s continued commercial influence at a time when Britain is preparing to leave the EU.

In addition to existing Free Trade Agreements, a process of similar pacts is being launched with partners such as Singapore, Vietnam and South Korea. The Mercosur deal will give the EU political impetus as the bloc is heading for talks with Australia and New Zealand.

Trade between the EU and Mercosur reached nearly 85 billion EUR (105 billion EUR) in 2016, and the market opening agreement will be one of Europe’s largest deals. However, Mercosur argues that the EU’s proposal to further open up the agricultural markets, including beef, is insufficient. In December, Cecilia Malmstrom’s team offered Mercosur to export an additional 70,000 tons of beef, 600,000 tons of ethanol and 100,000 tons of sugar per year to the reduced tariff unit.

“If we do not get a significant offer for agricultural issues, we can not reach an agreement”, said the Paraguayan ambassador to the EU, Rigoberto Gauto Vielman. In his words, Europe needs to do more to ensure a “reasonable and fair” agreement.

The EU, however, says the offer is generous and Mercosur has to agree to open more markets for European cheeses, cars and car parts.

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