Lula’s return means now is the time for an EU-Mercosur deal

The EU must realize the need for a trade agreement with Mercosur. The timing has never been better. The recent election of the President of Brazil, Lula da Silva, marks a new start in advancing the Mercosur agreement. The current Swedish EU Presidency, followed by Spain, presents a unique window of opportunity for the ratification of the agreement.

The free-trade-friendly Scandinavian country will lay the final groundwork for Spain to bring the deal home.

  • Lula as President-elect, meeting European Commissioner for Green Deals Frans Timmermans during the COP27 summit in November 2022 in Egypt (Photo: European Commission)

The agreement is not just an association agreement with like-minded partners with whom Europe has strong historical relations and shared values.

The pandemic and the war in Ukraine have created a new international geopolitical scenario and have further highlighted the interdependencies between our two regions and the need for close cooperation, joint responses and common solutions.

The aim is to work together to achieve mutually beneficial objectives, particularly with regard to the supply of strategic raw materials and foodstuffs. Both partners would reap the economic benefits and create one of the largest free trade areas in the world. This would open up the vast potential of the Latin American market to the EU by removing 91% of customs duties. EU companies exporting to Mercosur member countries will save a lot of money, thanks to the elimination of customs duties.

Some numbers

This would benefit both citizens and businesses.

EU companies are major investors in Mercosur and Mercosur companies are increasingly investing in the EU. More than 60,000 EU companies export to Mercosur. Companies from Mercosur countries employ more than 30,000 people in the EU. If we facilitate trade and investment with Mercosur, these figures could be even higher.

This would bring more jobs and more prosperity to both regions. For the Mercosur countries, the intensification of trade would be an essential mechanism to stimulate growth, raise wages and fight against poverty.

European Council President Charles Michel recently met with Lula da Silva in Brazil and said a new era of cooperation between the EU and Brazil has begun. This political momentum could be another big push to wake up the deal and, as European Commission President Ursula von der Leyen said in her speech, finally push the EU-Mercosur deal forward.

This would establish cooperation and coordination on a range of global issues, including sustainable development, climate change, biodiversity protection and the war in Ukraine. At a time when war is back on our continent and authoritarian countries like Russia, China and Iran show their worst repressive reflexes, the EU should seek cooperation between countries that share our faith in democracy and human rights.

While some third countries look inwards and invoke protectionism, the agreement speaks in favor of the EU’s commitment to more free trade.

But the environment?

One argument raised by opponents concerns the environment. Fortunately, we now have a committed partner who will boost environmental relations and fight against deforestation. The implementation of the Paris Climate Agreement underpins the entire agreement and contains a whole environmental component with safeguards.

Some also fear, wrongly, that the agreement will harm the EU’s single market and our product standards.

Instead, the deal will open up new opportunities by removing high tariffs in a market with ever-increasing purchasing power.

The agreement includes an automatic suspension mechanism in the event of economic distortions and non-compliance with EU standards. More predictable procedures and clear and transparent auditing rules will further reassure companies. Consumers can therefore be assured that the agreement supports and strengthens EU food standards, as the Mercosur countries are among our most important food producers.

The EU also has a lot to learn from Brazil, Paraguay and Uruguay, which are among the countries with the highest level of renewable energy production in the world.

The agreement will have no impact on global greenhouse gas emissions. This would be the case, even without taking into account the possible positive impact on energy efficiency and technology.

In conclusion, the agreement with the Mercosur countries is not the problem, but the solution. By ratifying the agreement, the EU will be the first major partner to celebrate a trade agreement with Mercosur.

It would increase economic opportunities and development for EU and Mercosur countries, provide a platform for cooperation and coordination on a range of global issues, and improve the environment.

Joint efforts are essential to move forward with the ratification of this agreement, and the EU institutions and Member States must commit to taking the agreement forward this year, before this window of opportunity closes itself.


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