In defence of the EU-Mercosur trade agreement

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Camila Villard Duran, you are a law professor at ESSCA School of Management, and as a lawyer, you would like to take the defence of a not very popular “suspect”.

Yes, I would like to speak in defence of the trade agreement between the European Union and Mercosur.

You realise that many European farmers are protesting against such an agreement right now!

I am aware of this resistance and can understand it. The simple fact that the trade negotiations with Mercosur have been going on since 1999 exemplifies the complexities and challenges inherent in forging international trade pacts among blocs with diverging interests.

 

What are the main difficulties?

From the Mercosur side, access for Europeans to public procurement has emerged as a serious issue, exacerbated by Brazil’s policy focus on local business growth.

From the EU side, the insistence on stringent environmental and social standards has not resonated well with Mercosur member countries. In their perception, the demands imposed by the EU seem redundant with existing global commitments such as the Paris Agreement. Mercosur nations are also represented in other multilateral forums in environmental matters, and if there are sometimes shortcomings in the implementation of their commitments, the same could be said of quite a few European member-states. As a result, the demands of the EU are perceived as primarily driven by national protectionisms.

 

But does the EU not have the right to protect its own interests, including its farmers?

Of course it does. But what Europeans should understand is that there’s more to such an agreement than economic gains and trade interests. The agreement holds strategic and geopolitical significance, especially for the EU! It’s a chance to diversify its economic ties away from China and secure critical resources for its green energy transition and food security in a world marked by climate change.

In the transition towards clean energy, Latin American countries emerge as key players in the clean energy transition, because they possess significant resources in indispensable minerals. The region dominates lithium production, led by Chile and Argentina, and holds vast reserves of other vital minerals like graphite, nickel, manganese, and rare earth elements. Brazil alone holds around one-fifth of global reserves in each of these resources.

Concerning the reliable supply of food, Mercosur nations emerge again as crucial players. The region contributes approximately one-fourth of the world’s exports in agricultural and fisheries products, emphasizing the significance of trade openness.

And despite its potential, Latin America remains underinvested, offering a great opportunity for enhanced collaboration. Of course, all efforts should be in line with EU social and environmental standards. And there are institutional venues to ensure this aim. For instance, the Paris Agreement and the EU future regulation on corporate due diligence already serve as crucial elements within a broader legal framework.

 

In 2024, Brazil holds the G20 Presidency. Do you think this is an opportunity?

Yes, I think it’s a watershed moment. It will be essential for both the EU and Mercosur to seize this opportunity and navigate a path toward a diplomatic accord. What it takes is transparent communication and mutual respect. In my opinion, the most effective strategy for the EU to enhance environmental and social standards in Mercosur nations is, above all, to increase its own economic footprint in the region.

 

And if Europe says finally no to the agreement?

They run the risk of Mercosur partners abandoning the EU deal in favor of trade agreements with Asian nations, particularly China. Lula’s Mercosur presidency in 2023 already marked a significant milestone with the signing of a crucial trade agreement with Singapore, which can serve as a gateway to Southeast Asia for Latin American businesses. Mercosur is actively pursuing agreements with South Korea and Japan, propelled by Brazil’s agricultural sector’s ambition to enhance food sales in Asia.

What Europeans need to understand is that beyond economic arguments it is in their interest to diversify their partnerships, reduce dependance on both China and the US, and build strong relationships with a continent that has great potential and can play an important role in the global dynamics of tomorrow.

 

Many thanks, Camila Villard Duran, for your rational arguments and passionate defence. We will no doubt ring you up again if and when things become more concrete. In the meantime, I recall you are law professor at ESSCA School of Management, based in Angers.