The EU and the Mercosur countries -- Argentina, Brazil, Paraguay and Uruguay -- are trying to finalize a trade deal after reaching an agreement in principle in 2019, following two decades of negotiations.
But ratification by the EU's 27 members has stalled, notably over European concerns about Mercosur countries' environmental protections -- particularly in the Amazon rainforest.
The EU has proposed a "side letter" to the agreement, with extra environmental guarantees, rankling South American leaders and slowing down progress to notching a final agreement.
Brussels wants any deal with Mercosur nations to include compliance with various commitments made as part of the 2015 Paris climate accords, which are currently voluntary.
The Mercosur summit, to be held in Puerto Iguazu, Argentina, will bring together Argentine President Alberto Fernandez and the presidents of Uruguay, Paraguay and Brazil: Luis Lacalle Pou, Mario Abdo Benitez and Luiz Inacio Lula da Silva, who will take up the bloc's pro-tempore presidency until the end of the year.
The bloc represents 62 percent of South America's population and 67 percent of the continent's gross domestic product.
Brazil's Lula has led the criticism of the EU's environmental demands, telling reporters last month that "strategic partners should have a relationship of mutual trust, not mistrust and sanctions."
Deforestation in the Amazon surged under Lula's predecessor, far-right ex-president Jair Bolsonaro, in office from 2019-2022.
But although veteran leftist Lula has cast himself as the anti-Bolsonaro on environmental policy, he told European Commission head Ursula von der Leyen in June that he had concerns over the additional environmental guarantees.
Lula accused EU lawmakers of trying to legislate "outside their territory" with measures that "change the balance of the agreement."
The EU's top diplomat, Josep Borrell, acknowledged recently that the environmental proposals have not been well-received by the South American countries and said that Europe is waiting for a concrete response to their requests.
Despite Brazil's criticisms, leaders there still hope to reach a deal.
Latin America's largest economy wants to reach a "well-balanced" result "for both parties," Mauricio Carvalho, secretary for economic and financial affairs at the Ministry of Foreign Affairs told AFP.
For Bruno Binetti, an expert on international affairs at the Inter-American Dialogue think tank in Washington, "the most" that can come out of the summit is "a specific agenda before the EU," with "demands."
"But I don't think we are at that stage," he told AFP.
Mercosur calls for update to EU trade agreement
Puerto Iguazu, Argentina (AFP) July 3, 2023 -
The South American trade bloc Mercosur opened a two-day summit on Monday with host Argentina calling for an update to a long-paused trade deal with the European Union which it said was the product of an asymmetrical relationship.
Observers have low expectations for the summit's ability to give final shape to the pact stalled by EU concerns over environmental protections, particularly in the Brazilian Amazon.
Mercosur countries Argentina, Brazil, Paraguay and Uruguay reached an agreement in principle with the 27-member EU in 2019 after two decades of negotiations.
The EU has since proposed a "side letter" to the agreement with extra environmental guarantees, rankling South American leaders.
Brussels wants any deal with Mercosur nations to include compliance with commitments made under the 2015 Paris climate accords.
On Monday, Argentine Foreign Minister Santiago Cafiero said deepening ties between Mercosur and the EU was "necessary in an international context of conflict and growing uncertainty."
For this to happen, however, the 2019 draft agreement needed an "update" as it "reflects an unequal effort between asymmetrical blocs," he told fellow ministers gathered at Puerto Iguazu.
Cafiero pointed out that under the draft deal, Mercosur will scrap tariffs on 95 percent of agricultural imports from Europe, which reciprocates with only 82 percent.
And he said the agreement as it stands had an excessive focus on environmental issues at the expense of economic and social considerations in largely agricultural and developing Mercosur members.
- 'Mistrust and sanctions' -
The ministers met ahead of Tuesday's gathering of Argentine President Alberto Fernandez with his counterparts from Uruguay, Paraguay and Brazil: Luis Lacalle Pou, Mario Abdo Benitez, and Luiz Inacio Lula da Silva.
The bloc, founded in 1991, represents 62 percent of South America's population and 67 percent of the continent's gross domestic product.
Brazil's Lula has led criticism of the EU's environmental demands, telling reporters last month that "strategic partners should have a relationship of mutual trust, not mistrust and sanctions."
Deforestation in the Amazon surged under Lula's predecessor, far-right ex-president Jair Bolsonaro, in office from 2019-2022.
And while veteran leftist Lula has cast himself as the anti-Bolsonaro on environmental policy, he told European Commission head Ursula von der Leyen in June he had concerns over the additional environmental guarantees.
Lula accused EU lawmakers of trying to legislate "outside their territory" with measures that "change the balance of the agreement."
Brazil will take up Mercosur's rotating presidency until the end of the year.
The EU's top diplomat, Josep Borrell, acknowledged recently that the environmental proposals were not well received by the South American countries and said Europe was awaiting a concrete response.
Given the divide, Bruno Binetti, an expert on international affairs at the Inter-American Dialogue, a think tank in Washington, said the most that could come out of the Argentina summit was "a specific agenda" with "demands."
"But I don't think we are at that stage," he told AFP.
Brazil's Foreign Minister Mauro Vieira said his country would submit a draft counter-proposal to the EU within days.
He added the bloc would resume work on a bid by Bolivia to join Mercosur.
Related Links
Global Trade News
| Subscribe Free To Our Daily Newsletters |
| Subscribe Free To Our Daily Newsletters |
