Inauguration of Brazil president Lula da Silva on 1 January 2023 – his re-arrival marks a fresh start to move forward on the Mercosur Agreement (Photo: Wikimedia)
The EU must realise 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 fresh start to move forward on 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.
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Lula as president-elect, meeting EU green deal commissioner Frans Timmermans at the COP27 summit in November 2022 in Egypt (Photo: European Commission)
The agreement is not only 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 geopolitical international scenario and have brought to light even more 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 goals, especially concerning the supplying of strategic raw materials and food. Both partners would reap the economic benefits and create one of the biggest free trade areas in the world. It would open up the vast potential of the Latin American market for the EU by removing 91 percent of the tariffs. EU businesses that export to member countries of Mercosur will save a lot of money, thanks to the elimination of tariffs.
Some numbers
It would benefit both citizens and companies.
EU companies are major investors in Mercosur and Mercosur companies are increasingly investing in the EU. Over 60,000 EU companies export to Mercosur. Companies from Mercosur countries employ more than 30,000 people in the EU. If we make trade and investment with Mercosur easier, these figures could be even higher.
It would bring more jobs and more prosperity in both regions. For the Mercosur countries, the greater levels of trade would be an essential mechanism to stimulate growth, increase wages and combat poverty.
The president of the European Council, Charles Michel, recently met with Lula da Silva in Brazil and expressed that a new era of cooperation between the EU and Brazil has begun. This political momentum may be another great push to awaken the agreement and, as the European Commission president Ursula von der Leyen declared in her speech, finally take the EU-Mercosur agreement forward.
It would enable the establishment of cooperation and coordination on a range of global issues, including sustainable development, climate change, protection of biodiversity, and the war in Ukraine. In an era where the war is back on our Continent and authoritarian countries like Russia, China and Iran are showing their worst repressive reflexes, the EU should seek cooperation amongst countries that share our belief in democracy and human rights.
When some third countries are looking inwards and invoking protectionism, the agreement speaks in favour of the EU’s commitment for more free trade.
But the environment?
An argument that has been raised by opponents concerns the environment. Fortunately, we now have a committed partner that will boost environmental relations and fight deforestation. The implementation of the Paris Climate Agreement underpins the entire agreement and it contains an entire environmental section with safeguards.
There are also some misguided concerns that the agreement hurts the EU’s Single Market and our product standards.
Instead, the agreement will open up new opportunities by removing high customs duties in a market with an increasingly high purchasing power.
The agreement has an automatic suspension mechanism if economic distortions and non-compliance with EU standards occur. More predictable procedures and clear and transparent audit rules will further reassure companies. Consumers can therefore rest assured that the agreement bolsters and reinforces the EU’s food standards, as the Mercosur countries are some of our most important food producers.
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The EU also has a lot to learn from Brazil, Paraguay and Uruguay which are some of 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 reflecting the possible positive impact on energy efficiency and technology.
In conclusion, the agreement with Mercosur countries is not the problem, but the solution. By ratifying the agreement, the EU will be the first big partner to celebrate a trade agreement with Mercosur.
It would increase economic opportunities and development for both the 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 advancing the agreement this year, before this window of opportunity closes.
Source: euobserver.com
