EU, Mercosur Reach Free Trade Deal

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Facts

  • The EU and South America's Mercosur trade bloc signed on Friday, on the sidelines of a Mercosur summit in Montevideo, a free trade agreement that, if ratified, will create the world's largest and most populated free trade zone.[1][2]
  • The deal — which comes after 25 years of negotiations — will eliminate tariffs on 91% of EU exports to Mercosur countries, including cars, machinery, chemicals, and agricultural products, and 92% of Mercosur exports to the EU, liberalizing 82% of EU agricultural imports.[3][4]
  • A first political agreement had been achieved in 2019, but collapsed over EU environmental concerns related to fires in the Amazon rainforest. The latest deal, however, could be suspended if countries fail to comply with their promises under the Paris climate treaty.[3][5]
  • The EU-Mercosur agreement now requires approval from 15 of the 27 EU members — representing 65% of the EU population and a simple majority in the European Parliament — before its implementation. Spain and Germany strongly support the deal.[6][5]
  • Meanwhile, France and Poland have come out against the agreement. Reports suggest that Italy would also oppose the deal as it stands, with officials from Prime Minister Giorgia Meloni's office calling for stronger safeguards for European farmers.[5][7]
  • Last year, the EU exported nearly $59B worth of goods to, and imported some $57B worth of goods from Mercosur countries. Germany and the Netherlands were the top traders with Mercosur in terms of the value of goods.[8][9]

Sources: [1]Associated Press, [2]MercoPress, [3]Euractiv, [4]European Commission, [5]The guardian, [6]Al Jazeera, [7]Agenzia ANSA, [8]BBC News and [9]POLITICO.

Narratives

  • Pro-establishment narrative, as provided by EPC and ECFR. The EU-Mercosur trade deal is an economic opportunity for Europe, providing access to South America’s critical raw materials essential for the green transition and reducing dependence on China. It lowers tariffs, opens investment opportunities, and supports European industries like chemicals and machinery. While farmers are concerned about competition from South American imports, the deal’s economic and strategic benefits, including strengthened supply chains and geopolitical influence, outweigh these challenges and offer a path to balance their needs through targeted support.
  • Establishment-critical narrative, as provided by The European Conservative and Greenpeace European Unit. The EU-Mercosur trade deal prioritizes corporate profits over people, democracy, and the environment. Negotiated by bureaucrats for over two decades, it lacks transparency and excludes public input. The deal threatens to worsen deforestation, promote harmful agricultural practices, and undermine European farmers through cheap imports of beef, chicken, and sugar. Furthermore, it exacerbates social inequalities and weakens vital environmental and human rights protections. By pushing this deal in secrecy, the EU has ignored critical concerns in favor of corporate gains, representing both an economic and moral failure.

Predictions