Wednesday, June 12, 2024

ECONOMY | 14-06-2023 15:57

Presidents of Argentina, European Commission call for ‘win-win’ Mercosur trade deal

Stopping in Buenos Aires during a trip through Latin America, European Commission head Ursula von der Leyen pushes for EU-Mercosur deal before the year is out; President Alberto Fernández expresses optimism while calling for the "removal of the obstacles" making for inequality.

President Alberto Fernández and European Commission head Ursula von der Leyen met in Buenos Aires on Tuesday, with both leaders calling for a “mutually beneficial” outcome to talks over the disputed EU-Mercosur trade deal.

The long-awaited free-trade deal between the European and South American blocs was famously presented as a done deal in 2019 after more than two decades of negotiations. But tensions have been awakened on both sides over sticking points, most notably environmental conditions.

Von der Leyen is eager to close an agreement, stressing as much during the Argentine stopover of her Latin American swing taking in four countries.

"I hope we can conclude the agreement between Mercosur and the European Union. We have exchanged a preliminary letter and are awaiting a response. We will work hard to close a mutually beneficial agreement as soon as possible," the EU chief said at a Casa Rosada press conference, while standing next to President Fernández.

Coming from Brazil the previous day in a tour which will continue on to Chile and Mexico, Von der Leyen called for "an ambitious agreement to be concluded before the year is out." 

She continued: "That would be our common wish. We have a window of opportunity to conclude this agreement. If [that window is] closed, it would be a pity because most of the work has already been done."

Fernández considered that the agreement depended on the support of administrations in office.

"It’s up to us and to Europe to remove the obstacles and if the political will exists, it’s not so difficult. On our side we ask for a balanced agreement," he declared.

The Mercosur trade bloc, made up of Argentina, Brazil, Paraguay and Uruguay, reached an agreement with the European Union in 2019 but the deal never went into effect because it was not ratified. A host of obstacles got in the way, among them European objections to Brazil’s environmental policies and South American misgivings about Europe’s protection of its agricultural production.

Both Argentina and Brazil have shown reluctance to put into effect an understanding they considered unequal while the European Union underlined its concerns over deforestation in the Amazon during the Jair Bolsonaro presidency.



The interchange between Fernández and von der Leyen in the Casa Rosada offices lasted 50 minutes with the former doing most of the talking while the EU chief listened, sources said. At the end of the meeting they made a joint statement to the press in the Salón Blanco.

"Now new problems have come up, firstly, the agricultural protectionism of some European countries and secondly, the Green Pact which Europe has signed up to improve the conditions for cleaner development but which unmistakably affects the agreement," remarked the President, addressing impediments delaying agreement. "Those are the things we have to discuss. Seeing that everybody wants an agreement with the EU, as I see it, it is up to us and Europe to start removing obstacles."

Brazil President Luiz Inácio Lula da Silva had much the same to say Monday when the European Commission chief visited him in Palacio Planalto. The Partido dos Trabalhadores (PT) leader is worried about the modified conditions for access to European markets fixed in the Green Pact. The latter takes the form of a combination of political initiatives on the part of the European Commission imposing a series of measures and policies aimed at arriving at "climatic neutrality" by 2050.

During Tuesday's exchange, Fernández remarked on the importance of the new norms stemming from the Green Pact being implemented in the framework of the World Trade Organisation (WTO) and being based on scientific evidence in order to assure that they are not arbitrary discrimination which cannot be justified or a restriction on international trade.

"We have been working with Mercosur in order to ask them for their requirements for ending the asymmetries and restoring balance. We want an agreement with the EU which balances the economies of each of the regions," he remarked in the statement. 

"We are asking for a balanced win-win agreement," emphasised Alberto Fernández in his capacity as pro-tempore president of Mercosur, while revealing that he would be transferring the presentation of the three documents being negotiated to member countries in order to advance in the formalisation of the agreement with the central focus on energy, including renewables.

The French National Assembly last Tuesday drew its red lines for approval of an EU-Mercosur trade agreement, against which most political groupings took up a position. The deputies urged the liberal government of President Emmanuel Macron to convey to the European Commission their opposition to the pact if various public health and environmental criteria are not respected.


'Mutually beneficial'

Reiterating her hopes of reaching an understanding in the course of the year, Von der Leyen said that her intentions had been formalised ahead of sending the first letter to which an answer was awaited.

"We will work full tilt to make this agreement a mutually beneficial reality as soon as possible," she indicated. 

Von der Leyen also promised increased investments in infrastructure via the Global Gateway system, which aims at investing in heavily indebted countries with weak economies but rich in natural resources – 10 billion euros in Latin America and the Caribbean and receptive to requests.

In another passage of her delivery she mentioned having signed a memorandum of understanding – a Strategic Association of Sustainable Value Chains for Raw Materials (including lithium) -– to promote sustainable mining while forecasting that European demand for lithium will grow 12 times by the year 2030, which, she highlighted, could signify a major opportunity for Argentina. 

Argentina is among the main global producers of this metal, forming the so-called ‘lithium triangle’ with Bolivia and Chile with almost two-thirds of world reserves. 

Finally, Von der Leyen justified the military and financial aid to Ukraine in the face of the Russian invasion, calling for a "fair and lasting" peace settlement.

"If Russia ends combat, the war would be over but if Ukraine stops defending itself, it will disappear," she indicated while thanking Argentine support for United Nations resolutions. 

"Ukraine must be supported when defending its sovereign rights and territorial integrity. We all want peace but it must be a fair, lasting and comprehensive peace," she highlighted.

Von der Leyen thanked "Argentina for expressing its unshakeable support for Ukraine from the start" while underlining the impact of the war on the international economy, energy markets and food security.



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