South American Trade Bloc Signs ‘Historic’ Trade Deal With EU

After nearly 20 years of negotiations, the South American bloc, Mercosur has agreed to draft a free-trade treaty with the European Union. The two parties have been negotiating since 2000, but the election of United States President Donald Trump intensified efforts to reach an agreement due to the EU freezing talks with the U.S. and looking for other trade allies following Trump’s victory. These intensified efforts have led to trade agreements between the EU and Canada, Japan and Mexico, and now after so many years of negotiations, the EU has also reached a provisional agreement with Mercosur  (a grouping that consists of Uruguay, Paraguay, Brazil, and Argentina). According to Al Jazeera, The EU is already Mercosur’s biggest trade and investment partner and its second-largest partner for trade in goods. This trade deal is great for Europe when it comes to tariffs as well. The savings that come from this agreement are potentially quadruple the amount from the deals with Canada and Japan combined. However, the deal still faces a long and difficult road to approval. France, among other countries, are concerned about the potential impacts from an increase in beef imports. At the same time, many environmental groups fear that the deal will cause an increase in deforestation. 

Despite this, many people are very grateful and excited about this deal. Brazilian President, Jair Bolsonaro said on Twitter that “the deal was historic and one of the most important trade agreements of all time”. In addition, European Trade Commissioner, Cecilia Malmstrom said earlier this month that “sealing a trade accord with Mercosur is my top priority”. Once the deal was completed, he stated, “I measure my words carefully when I say that this is a historical moment. In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade”. When asked about the potential drawbacks from the deal, the EU’s agricultural commissioner, Phil Hogan stated, “Today’s agreement also presents some challenges to European farmers and the European Commission will be available to help farmers meet these challenges. For this agreement to be a win-win… carefully managed quotas will ensure that there is no risk that any product will flood the EU market and thereby threaten the livelihood of EU farmers.”

While this deal on the surface seems very excited, it also has several drawbacks to it. Many European farmers are rightfully concerned about what challenges the agreement will impose on them. The price for beef imports would reach all-time highs and soon the pursuit of these farmers livelihoods will become a lot more difficult. Simultaneously, the fact that the EU and several South American countries finally came to an agreement after almost 20 years shows that several countries on multiple continents are actively working together to achieve a common goal, and should be commended. This agreement will also most likely reduce any conflicts between the two continents, something that everyone should be excited about. 

One of the reasons that it took so long for this agreement to be signed in the first place was over Brazil’s alleged harm to its rainforests and Indigenous people, as well as causing major deforestation. Many European environmental groups hold larger amounts of power in the new European Parliament and have urged the EU to halt the trade talks with Brazil for this reason. This is still a very relevant criticism of the deal, and many are calling for the deal to be cancelled, but it is too early to tell if that will actually happen.  

This trade deal is definitely a step in the right direction for both the EU and South America. After so many years of negotiating, it is nice to see them finally come to an agreement. As for if the deal will even get approved, it is too early to say. But the mounting pressure from European farmers as well as environmental groups can surely be felt—after all, no compromise comes without its drawbacks.