What are the geopolitical perspectives of Mercosur countries in the context of the EU-Mercosur trade discussions? Are both sides wasting a major opportunity for a solidified partnership based on shared values? “Both sides must put aside their disagreements about politics and focus on shared interests in an increasingly hostile world,” thinks DSLA member Anibal Nicolas Saldias.
Anibal Nicolas Saldias
DSLA member, senior analyst, Economist Intelligence Unit, USA
For nearly 30 years the European Union (EU) and Mercosur have been in talks to seal a free trade agreement (FTA) that, if approved, would make it one of the world’s largest free trade zones. The deal would allow Europeans to have preferential access to Mercosur’s large and growing market for high-end services and high-value goods. It would also give Europeans greater access to the bloc’s vast critical mineral reserves and ensure food security, both of which are vital for geopolitical autonomy amid growing economic fragmentation.
Mercosur countries would benefit by becoming a preferred destination for EU-based investment that would trickle down to create important positive technological spillovers as well as integration into the EU supply chains, which would bolster industrialization in the region. Despite these clear economic advantages, powerful lobby groups that stand to lose out from freer trade have so far frustrated attempts to finalize any agreement.
Delaying the FTA further would weaken both the EU and Mercosur in a world experiencing an accelerated process of economic and geopolitical fragmentation. The Russian invasion of Ukraine demonstrated to EU countries the enormous risks of relying on non-democratic countries for the supply of raw materials that fuel the European economy. It also put into relief that the economic globalization of the post-Cold War period, whereby efficiency gains predominated over geopolitical considerations, is coming to an end. The EU securing an FTA with Mercosur would also give it a meaningful advantage over authoritarian states, like China or Russia in accessing the region’s natural resources. Mercosur would benefit as an EU FTA would likely encourage investment in adding value to natural resources domestically.
Another barrier to finalizing the FTA are high profile personality and political differences between European and Latin American policymakers in recent years. Both sides must put aside their disagreements about politics and focus on shared interests in an increasingly hostile world. Although disagreements may be deeply held, at the core of the matter is that the EU and Mercosur are democratic regions with populations deeply committed to defending democracy. As a result, the proper way to interpret the EU-Mercosur FTA is more than just a trade agreement, it’s a hard-nosed acknowledgement that shared values also means supporting each other and building economic resilience amid rising geopolitical storm clouds.
The views expressed in these works are the responsibility of its authors and do not necessarily reflect those of the Forum 2000 Foundation or its staff.
