{"id":138505,"date":"2025-03-17T01:15:07","date_gmt":"2025-03-17T01:15:07","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/mercosur-eu-trade-deal-challenges-protectionism\/"},"modified":"2025-03-17T01:15:07","modified_gmt":"2025-03-17T01:15:07","slug":"mercosur-eu-trade-deal-challenges-protectionism","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=138505","title":{"rendered":"Mercosur-EU Trade Deal Challenges Protectionism"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<h2 class=\"wp-block-heading\" id=\"h-twenty-five-years-in-the-making-the-landmark-agreement-eliminates-tariffs-on-over-90-of-goods-while-reshaping-south-america-europe-trade-ties-nbsp\"><em>Twenty-five years in the making, the landmark agreement eliminates tariffs on over 90% of goods while reshaping South America-Europe trade ties.\u00a0<\/em><\/h2>\n<p>A quarter-century after negotiations began, Mercosur, the South American trade bloc whose core members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay, has finally signed a trade agreement with the European Union (EU). The deal runs against the grain in an era of growing protectionism and rising deglobalization.<\/p>\n<p>\u201cThis agreement is not just an economic opportunity, it is a political necessity,\u201d European Commission President Ursula von der Leyen said at the Mercosur Summit in Montevideo in December, where the pact was signed. \u201cI know that strong winds are coming in the opposite direction, towards isolation and fragmentation, but this agreement is our near response.\u201d<\/p>\n<p>The deal is the EU\u2019s largest ever and Mercosur\u2019s first with a major trading partner.<\/p>\n<p>\u201cEuropean products will enter [the Mercosur] market under much better conditions than US or Japanese products,\u201d Federico Steinberg, visiting fellow at the Center for Strategic and International Studies in Washington, DC, wrote in a paper published on December 6. By eliminating tariffs on over 90% of goods, the agreement is expected to save EU exporters \u20ac4 billion annually while granting South American producers preferential access to European markets for competitive agricultural products.<\/p>\n<p>The agreement has two parts. One covers goods, services, public procurement, and intellectual property, focusing on trade issues such as tariffs, with special attention to automobiles, agriculture, and critical minerals.<\/p>\n<p>\u201cIncreasing uncertainties in geopolitics\u201d have sparked interest in rare earth minerals, says Charlotte Emlinger, an economist at the Center for Prospective Studies and International Information (CEPII) in the French prime minister\u2019s office. For sensitive items, such as beef exports to Europe, quotas put a lid on inflows.<\/p>\n<p>The second part of the pact addresses broader themes, including human rights and the environment. Along with another 2024 EU trade pact with New Zealand, it breaks new ground by referencing the Paris Agreement on climate change, a detail notably accepted by Argentine President Javier Milei, a global-warming skeptic.<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-what-is-mercosur-and-why-does-it-matter\">What Is Mercosur And Why Does It Matter?<\/h2>\n<p>With a combined GDP of nearly $3 trillion, the four core members of Mercosur\u2014Spanish for \u201cSouthern Common Market\u201d in Spanish\u2014would rank as the world\u2019s fifth-largest economy. Some 300 million people live in an area of nearly 15 million square kilometers. The GDP figure doesn\u2019t include Bolivia, which has been approved for membership but is in a four-year \u201cimplementation period\u201d to come fully on board.<\/p>\n<p>The EU was already Mercosur\u2019s second-largest trading partner two years ago for goods, accounting for 16.9% of total trade, trailing China but beating the US, according to the European Commission. The EU exported \u20ac55.7 billion worth of goods to Mercosur that year, with \u20ac53.7 billion going the other way.<\/p>\n<p>Touted as the emerging EU of the South when it was founded in 1991, Mercosur has yet to evolve beyond an imperfect customs union. The original four added Venezuela in 2012 only to suspend it in 2016 for violating political standards; Bolivia rose to full membership last year.\u00a0 Suriname, Guyana, Colombia, Ecuador, Panama, Peru, and Chile are associated states; they won\u2019t be formally affected by the EU-Mercosur deal.<\/p>\n<p>Intra-regional trade among the four founders jumped four-fold to $16.9 billion between 1990 and 1996, according to the Inter-American Development Bank, but true integration has proven elusive. Internal trade remained at just 10.3% of the global total in 2022, according to data from the Observatory of Economic Complexity, an online database.<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-why-now\">Why Now?<\/h2>\n<p>The timing of the deal can be linked to efforts by the EU to ensure continued robust and diversified trade in the face of protectionist measures by the US under US President Donald Trump, the growing role of China, and the demise of the World Trade Organization (WTO) as an effective facilitator of international trade integration.<\/p>\n<p>\u201cIn the last few years, the geopolitical situation has become more dire for the EU,\u201d says Maximiliano Marzetti, associate professor of Law, Department of International Negotiation and Conflict Management, Lille Economics Management Lab in France, \u201cwith the war in Ukraine, Brexit, and the protectionist and aggressive policies of China and the United States. The EU needs new trade partners in a climate of hostility to free trade and also to assert its relevance on the current multipolar international stage.\u201d<\/p>\n<p>Mercosur-EU negotiations date much further back: to 1999, during the period of \u201cpeak globalization,\u201d but they remained in low gear until late in the Obama administration, when the US began taking measures to weaken the World Trade Organization.<\/p>\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-1 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:33.33%\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"440\" height=\"350\" src=\"https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi.jpg\" alt=\"\" class=\"wp-image-70142\" srcset=\"https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi.jpg 440w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-300x239.jpg 300w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-217x173.jpg 217w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-435x346.jpg 435w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-106x84.jpg 106w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-212x168.jpg 212w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-255x203.jpg 255w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-264x210.jpg 264w, https:\/\/s44650.pcdn.co\/wp-content\/uploads\/2025\/03\/Ignacio-Bartesaghi-362x288.jpg 362w\" sizes=\"auto, (max-width: 440px) 100vw, 440px\"\/><figcaption class=\"wp-element-caption\"><strong><em>Bartesaghi, Catholic University of Uruguay: With the sweeping deal, the EU wanted to send a message to Trump.<\/em><\/strong><\/figcaption><\/figure>\n<\/div>\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:66.66%\"><span class=\"wp-block-paragraph\"><\/p>\n<p>Given a toothless WTO, bilateral and multilateral agreements became more critical, and the EU unleashed a flurry of activity. In Latin America, it added to accords with the Andean 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.<\/p>\n<p><\/span><\/p>\n<p>With the sweeping new Mercosur deal, \u201cthe EU wanted to send a message to Trump,\u201d says Ignacio Bartesaghi, director of the Institute of International Business at the Catholic University of Uruguay. \u201cWe know that you are going to close. We want to open.\u201d<\/p>\n<p>Mercosur, for its part, needed a victory. Either it \u201cclosed a deal with the EU, or it would die,\u201d Bartesaghi argues.<\/p>\n<\/div>\n<\/div>\n<p>All members are far from speaking with one voice, however.<\/p>\n<p>Argentina\u2019s self-described \u201canarcho-capitalist\u201d President Javier Milei has offered harsh words for Mercosur, even as he begins a one-year stint as the group\u2019s president pro tempore. During a speech at the Mercosur summit, Milei described the bloc as \u201ca prison that prevents member countries from leveraging their comparative advantages and export potential.\u201d<\/p>\n<p>A month later, in Davos during the annual meeting of the World Economic Forum, Milei told Bloomberg that he would abandon Mercosur and its Common External Tariff, which preempts side deals, for an accord with the US. \u201cIf the extreme condition were that, yes,\u201d he said. \u201cHowever, there are mechanisms that can be used, even being within Mercosur.\u201d<\/p>\n<p>Uruguay, too, has been exploring an independent deal with China. But \u201cnegotiations never started because of Lula\u2019s vision of Mercosur being together,\u201d notes Bartesaghi.<\/p>\n<p>Nor do these piecemeal agreements solve all the problems. The renewed bilateral deal with the EU will not solve associate member Mexico\u2019s problems if it is hit with higher tariffs from its northern neighbor.<\/p>\n<p>\u201cRemember that the US accounts for 80% of Mexican exports and the EU accounts for less than 5%,\u201d says Ashkan Khayami, senior analyst, Latin America Country Risk at BMI, a British multinational research firm. \u201cIt\u2019s not really plausible for the EU to replace the US as kind of the main destination, or even a very significant destination, for Mexican exports.\u201d<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-what-s-next\">What\u2019s Next?<\/h2>\n<p>Next comes ratification. For Mercosur, this is straightforward. Legislatures must vote, but if one balks, the accord will still apply for those that approve the deal. In Europe, however, the process is complex both bureaucratically and politically.<\/p>\n<p>Prior to December, French farmers were out protesting the Mercosur deal; a resolution against the deal has been filed in the French parliament. Politicians in Poland, Italy, and the Netherlands, too, are raising questions. But observers tend to chalk this up to domestic posturing.<\/p>\n<p>Thanks to the above-mentioned quotas for beef, for example, \u201cthat\u2019s just a hamburger per inhabitant,\u201d says Bartesaghi. Paraphrasing a French colloquial saying, \u201cMercosur is the tree that hides the forest,\u201d Emlinger quips.<\/p>\n<p>While the EU has sovereignty over trade, other treaty issues need member states\u2019 approval. Proponents may therefore try to split the Mercosur text into its two component parts, trade and other. The trade section could presumably be fast-tracked though the European Parliament, where it would need votes representing 65% of constituents. Other sections, including environmental issues, would take the longer, country-by-country route.<\/p>\n<p>\u201cIt is likely that the EU will opt, if it can, to split the ratification process,\u201d says Marzetti.<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Twenty-five years in the making, the landmark agreement eliminates tariffs on over 90% of goods while reshaping South America-Europe trade ties.\u00a0 A quarter-century after negotiations began, Mercosur, the South American trade bloc whose core members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay, has finally signed a trade agreement with the European Union (EU). The deal [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":138506,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[11117,10465,59163,25391,9792],"dealstore":[],"offerexpiration":[],"class_list":["post-138505","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-challenges","tag-deal","tag-mercosureu","tag-protectionism","tag-trade"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Mercosur-EU Trade Deal Challenges Protectionism - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=138505\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mercosur-EU Trade Deal Challenges Protectionism - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Twenty-five years in the making, the landmark agreement eliminates tariffs on over 90% of goods while reshaping South America-Europe trade ties.\u00a0 A quarter-century after negotiations began, Mercosur, the South American trade bloc whose core members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay, has finally signed a trade agreement with the European Union (EU). 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