EU and South America’s Mercosur bloc announce ‘win-win’ free trade deal

According to European Commission President Ursula von der Leyen, the two countries’ long-awaited free trade agreement have come to an agreement.

Von der Leyen and her Mercosur counterparts announced on Friday in Montevideo, Uruguay’s capital, that a deal had been reached after negotiations lasting more than 20 years and five years after the initial agreement.

“This is a win-win agreement”, von der Leyen said during a news conference alongside the presidents of the main Mercosur nations, including Argentina and Brazil.

“This agreement is not just an economic opportunity. It is a political necessity”, she added. “I know that strong winds are coming in the opposite direction, towards isolation and fragmentation, but this agreement is our near response”.

More than 700 million people who make up nearly 25% of the world’s GDP are covered by the agreement’s plan to establish one of the largest free trade zones.

Much like the US-Mexico-Canada free trade agreement, its goal is to reduce tariffs and trade barriers, making it easier for businesses on both sides to export goods.

Mercosur comprises Brazil – which makes up the lion’s share of the bloc’s territory, economic output and population – along with Argentina, Paraguay, Uruguay and Bolivia, the newest member. Venezuela’s membership has been suspended indefinitely.

The pact was praised by South American leaders, but some of the countries in Europe do not.

Von der Leyen’s announcement on Friday “regards only her,” according to France, who leads a group of EU member states with whom the country’s trade minister, Sophie Primas, continues to object.

“Today is not the end of the story”, Primas told the AFP news agency in a statement. “This only commits the commission, not the]EU] member states”.

15 of the 27 EU members, who make up 65 percent of the EU’s population, and a simple majority in the European Parliament, must approve the trade agreement.

Copa-Coge, a member of the European farmers’ organization, reiterated its opposition to the agreement and re-instated its protests on Monday in Brussels. The farmers argued that unfair competition would result from Mercosur products if they were sold outside EU standards.

“Real, profitable opportunities”

Von der Leyen claimed that the pact would benefit about 60, 000 businesses that export to the Mercosur region in remarks made to her “fellow Europeans” and perhaps those who are more skeptical, such as farmers.

She claimed that the agreement “will open up significant business opportunities” and that they will “benefit from reduced tariffs, simpler customs procedures, and preferential access to some crucial raw materials.”

“To our farmers”, she said, “we have heard you, listened to your concerns, and we are acting on them. Strong safeguards are included in this agreement to safeguard your livelihoods.

Poland said last week that it opposed the free trade agreement in its current form, while Italy claimed on Thursday that there were no prerequisites for signing off on a deal.

The agreement is largely opposed by environmental organizations in Europe. Friends of the Earth called it a “climate-wrecking” deal.

Meanwhile, German Chancellor Olaf Scholz hailed the conclusion of the deal.

“After more than 20 years of negotiations, the Mercosur countries and the EU have reached a political agreement”, he said in a social media post.

“The agreement has overcome a significant challenge. More growth and competitiveness will result in a free market for more than 700 million people.

After more than 20 years of negotiations, the #Mercosur countries and the EU have reached a political agreement. The agreement’s biggest challenge has been overcome. More growth and competitiveness will result in a free market for more than 700 million people.

Germany’s trade and industry associations also welcomed the move.

“Such important agreements must not take 25 years”, BGA trade lobby President Dirk Jandura said in a statement, adding that it was now up to the German government to ensure there is a majority for the “milestone” agreement.

The head of Germany’s BDI industry lobby group, Siegfried Russwurm, said the announcement was very good news for German and European companies as well as for their economies.

The trade agreement sends a clear and strategic signal for free and rules-based trade, according to Russwurm in a statement.

Spain also asserts that the agreement is crucial for the bloc as it seeks to diversify its trade following the bloc’s reliance on China and the near-closure of the Russian market during the conflict in Ukraine.

Spain and Germany see Mercosur as a potential reliable source of crucial minerals, such as lithium, which are used in batteries and are necessary for Europe’s green transition.

Source: Aljazeera