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ECONOMY | 01-02-2023 18:58

Mercosur states seeking ‘revised agreement’ with EU, says Cafiero

Foreign minister says ‘assymetries’ in deal must be resolved; Top EU officials pinpoint July summit in Brussels as potential completion date.

Argentina’s Foreign Minister Santiago Cafiero declared in Brussels on Wednesday that Mercosur member states are seeking "a revised agreement" with the European Union (EU), one which contemplates cooperation and the resolution of “asymmetries.”

Cafiero, whose country holds the pro-tempore presidency of the South American trade bloc, delivered his comments prior to a meeting with European Commission Vice-Presidents Josep Borrell and Valdis Dombrovskis (the former heading up EU diplomacy) in Belgium.

"We want an agreement with the EU but we want a revised agreement," Cafiero told a select group of media outlets. 

"We understand that there are certain points which need to be discussed,” added the foreign minister.

​​Mercosur – consisting of Brazil, Argentina, Uruguay and Paraguay – reached a deal with the European Union in 2019 after two decades of negotiations, but it has yet to be ratified. Since then talks have dragged on over the definitive format of the agreement.

Since that announcement, the EU has insisted on adding complementary chapters, especially related to climate change and deforestation, but, according to Cafiero, the South American trade bloc seeks to stand by what was negotiated up to 2019.

"We understand that complementary documents, mostly stemming from the European Green Pact [launched in 2020], which has partially modified the negotiations of 2019, still await discussion," said Argentina’s most senior diplomat.

Cafiero cited the case of biodiesel from soy produced in Argentina, which due to the norms adopted within the Green Pact, are virtually excluded from trade. This product accounts for 20 percent of Argentine exports to the EU, the minister observed.

"What we are saying is that if an original agreement already containing asymmetries in our judgement is modified, there should be complementary documents to compensate for those asymmetries," he expressed.

The chapter referring to state purveyance, said Cafiero, is another issue which in the view of Argentina and Brazil, should be revisited and resolved.

Top EU leaders agree that the time has come to close the agreement with Mercosur. Spain, which will occupy the EU presidency in the second half of the year, is bent on pushing forward with the stalled deal.

In seeking a trade agreement with Chile, the EU is exploring a new architecture for the treaty, dividing the issues and setting aside those aspects of the treaty which can be directly approved by the European institutions without having to be ratified by each of the 27 EU members.

 

July target date

The EU hopes to finalise the deal by July, fellow European Commission Vice-President Frans Timmermans said this week.

"I hope we can do this [conclude the deal] before the next summit with Latin America" on July 17 and 18 in Brussels, said the official.

One of the main stumbling-blocks has been concerns over the environmental policies of Brazil's far-right now ex-president Jair Bolsonaro. Leftist Luiz Inácio Lula da Silva, sworn in as leader on January 1, has vowed to close the talks.

Timmermans said Brazil's new leadership made a successful outcome more likely.

"We are no longer dealing with a government that is actively promoting deforestation. This is a government that is actively fighting against deforestation," said Timmermans.

Average annual deforestation during Bolsonaro's four-year term rose by 59.5 percent from the previous four years, and by 75.5 percent from the previous decade, according to government figures.

Lula had presided over a sharp drop in deforestation when he previously led Brazil from 2003 to 2010, and has vowed to reboot environmental protection.

He has said the EU trade deal was "urgent," but stressed on the campaign trail that further negotiation was needed to ensure Brazil can pursue "our interest in reindustrialising."

On Monday, Lula told visiting German Chancellor Olaf Scholz, who had also travelled to Chile and Argentina, that "we will close that agreement, if everything goes well" by the summer.

Scholz said in Buenos Aires last Saturday that a "quick conclusion" was needed.

Mercosur itself has also been shaken by disagreement over a free-trade treaty with China sought by bloc member Uruguay.

Uruguay has also applied to join the Trans-Pacific Partnership (CPTPP) – a trade agreement involving countries across eastern Asia, the Pacific, and North and South America – without the agreement of its Mercosur partners.

Lula, on a visit to Uruguay this month, called for Mercosur to urgently seal the EU trade deal before negotiating with China.

Argentina’s President Alberto Fernández said last Saturday in Buenos Aires, during Scholz’s visit to Buenos Aires, that he is keen to sign the deal, provided perceived imbalances in it are resolved.

All members of the bloc are keen to finalise the long-negotiated deal, Fernández said, adding that he has spoken to Lula repeatedly about the issue.

Scholz echoed the expectation, saying that specific topics that still need to be discussed should be resolved in the near future. 

“The important thing is that it doesn’t take so many years” of negotiations," said the German chancellor. 

 

– TIMES/AFP/BLOOMBERG

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