Trust In Ursula: EU-Mercosur Partnership Will Save Us From Trump

Donald Trump is back at the White House and with that, new threats to reactivate tariffs on European imported goods have returned to the scene. But this time Europe is prepared. Displaying impressive foresight, President of the European Commission, Ursula von der Leyen, secured a political agreement on December 6th, 2024, between the European Union and Mercosur countries (Argentina, Brazil, Paraguay and Uruguay). Aimed at tackling the effects of potential US tariffs on the EU, the agreement expects to set a strategic partnership deal with the objective of lowering trade barriers and effectively creating a free trade area between both regions. The news brought mixed reactions across Latin America and Europe, with some dismissing the utility of the partnership, but, how much truth do their protestations hold?

On the one hand, European farmers have shown their concern about the implications of Von Der Leyen’s new agreement. France leads the vanguard of detractors, which should elicit no surprise, given its history of blocking agreements with Mercosur. In 2019, environmental and agricultural worries scuppered the first draft of this Agreement. Preoccupations about unfair competition in agricultural goods were sustained under the claim that Latin American farmers do not have to fulfil the same environmental and quality standards as the EU, which guarantees them a favourable playing field in the European market. Although these concerns are valid, the European Commission made sure to demand, as an essential element of the deal, equal standards for Latin American goods to enter Europe. What’s more, France could actually benefit from the introduction of this trade partnership if it seizes the opportunity to revitalize its wine production, which has been suffering lately due to decreasing exports. So, as long as this mutual understanding is respected, no negative impacts on European agricultural goods should be feared.

On the other hand, Germany and Spain have demonstrated unwavering support for the agreement. Spanish PM, Pedro Sánchez, welcomed the deal, stating “trade openness with our Latin American friends will make us all more prosperous and resilient”. Thanks to shared language and history, the Iberic country sees an opportunity to become the leader of this renewed intercontinental approach. Nevertheless, Madrid hosted a farmer protest with the same arguments used by the French, highlighting the polarised nature of the issue in Spain. Meanwhile, Germany finds in Latin America a key region to expand its automobile market after battling China’s competition. But far from being solely a trade agreement, the Mercosur-EU conciliation reaffirms European influence in a region where China is increasing its investments. If Europe plays its cards well, this agreement might become a first step toward displaying a more active and assertive presence in international trade. One that could guarantee independence from the many invisible threads controlled by the master puppeteer of business relations in the world: China.

Although the European Commission considers the Agreement a “win-win” for both the EU and Mercosur, the reality is that a deal of this scope might be some way worse for the Latin American countries involved. The goods expected to be exported from Latin America are mainly agricultural. By contrast, imports from Europe are manufactured goods. The added value of processed goods are incomparable with raw materials, positioned with the lowest value for imports. Trade deals like these reinforce unequal exchange practices that Latin America has long been victim to. There are ways to stop this neocolonial pattern and, some of them, have been propagated by the EU itself. December 2023 witnessed the signing of the historic Advanced Framework Agreement between the EU and Chile. The Agreement gathered similar conditions as the Mercosur one, with the distinction of a European commitment to contribute to the development of Chilean industries. This commitment included the support and know-how exchange between both regions to develop competitive, modern and green enterprises linked with sustainable energy in Chile. Such a conscious approach is not only necessary for global trade justice, but it also contributes to building a strong and value-consistent perception of the EU's role in the world.

The EU-Mercosur Agreement has faced several bumps in the road. With the support of two big European States – Spain and Germany – and Italy’s support seemingly forthcoming, the agreement is closer than ever to becoming reality. Change is scary, but facts indicate that the great benefactor of this deal is, ultimately, Europe. However, the EU must remember its responsibilities to less developed countries when trading with them, committing to levelling their exchanges. After all, what Europe exports the most are not goods, but customs and behaviours.

Image: Wikimedia Commons/European Union (Dati Bendo)

Licence.

No image changes made.