Why Europe and Latin America need each other

In the dangerous and unpredictable multipolar world in which we live, trade relations remain of fundamental importance, but they cannot be separated from geopolitics. Many Europeans long believed that they could be, but Russia’s war of aggression against Ukraine has exposed the risks posed by the European Union’s dependence on Russian gas and has shown us that this approach is no longer tenable.

If the EU wants to be recognized as a true geopolitical actor, it will not be enough to strengthen our internal unity. We also need to recalibrate our strategic compass, using our political and economic instruments more coherently and identifying not only risks but also opportunities more effectively. That is why I have defended from the beginning of my mandate that Europe should deepen its ties with the countries of Latin America and the Caribbean.

To make the qualitative leap that we need, we will have to strengthen political dialogue at the highest level. But for our efforts to be credible, we must also complete the modernization of the existing association agreements with Mexico and Chile, sign the negotiated post-Cotonou agreement with the African, Caribbean and Pacific community, ratify the association agreement with the Central American countries and finalize the EU-Mercosur agreement.

Although trade plays an important role in all of these agreements, none can be considered just a trade agreement. The most complex of these agreements is that of Mercosur, which we have been negotiating for more than two decades. Tango could say that 20 years is nothing, but in this case it is too long.

On a recent visit to South America, I had the opportunity to meet with the leaders of Argentina, Paraguay and Uruguay, which currently holds the rotating presidency of Mercosur. A few weeks ago I congratulated the president-elect of Brazil, Luiz Inácio Lula da Silva, on his election. In all these talks, the EU-Mercosur agreement figured prominently. I have tried to convey to these leaders that the political will to finalize this mutually beneficial agreement is very much alive.

Admittedly, the word “strategic” is overused. But, in the case of the EU-Mercosur agreement, it could not be more appropriate. Although some oppose it –invoking the existence of conflicting interests– there are weighty arguments to finalize this agreement. To begin with, the EU-Mercosur agreement is much more than a trade agreement. It is a profoundly political instrument that, by promoting dialogue and cooperation, would seal a strategic alliance between two regions that are among the most aligned in the world in terms of interests and values, and that share a similar vision of the type of societies What we want.

In addition, on both sides of the Atlantic, we intend to strengthen our strategic autonomy and improve our economic resilience by reducing excessive dependencies. However, autonomy does not mean isolation. Rather it means diversifying value chains, which in turn requires cooperation with trusted economic and political partners.

Bringing together two of the world’s largest trading blocs – with a combined population of more than 700 million people – the EU-Mercosur deal would be the biggest trade agreement the EU has ever signed. It would also be Mercosur’s first global trade agreement, which would strengthen the integration of the group. Common standards would open the doors between our great markets and create real opportunities for companies on both sides, supporting the creation of high-quality jobs in Europe and Latin America. Recognizing that there is an economic asymmetry between the two regions, the agreement specifies that trade would be progressively opened, thus giving the relevant sectors time to modernize and become competitive.

The Mercosur countries want to export more to Europe, but they also want to avoid being reduced to exporters of extractive resources. They aim to develop their productive and export capacity, adding value to natural resources through innovation and technology, while adhering to strict social and environmental standards.

“We cannot isolate ourselves and change the world at the same time. Our regulatory framework must be accompanied by greater international dialogue and cooperation.”

A third argument in favor of the EU-Mercosur agreement lies in its potential to boost climate action and environmental protection. In fact, the political agreement that the EU and Mercosur reached in 2019 was one of the first of its kind to include a reference to the Paris climate agreement. However, in Europe there are doubts about the scope of this commitment, especially considering the acceleration of deforestation in the Amazon in recent years. Some in Europe argue that autonomous EU legislation would be the only credible way forward. But we cannot isolate ourselves and change the world at the same time. Our regulatory framework must be accompanied by greater international dialogue and cooperation, focused on clarifying shared commitments and building more sustainable value chains.

Lula has made clear his desire to defend Brazil’s democracy, heal the wounds of his society, advance the cause of social justice and boost the economy while tackling climate change and deforestation in the Amazon. The agreement with the EU would support this effort by allowing the exchange of knowledge, the improvement of standards, the strengthening of environmental protection and sustainable modes of production. The European side will propose an additional instrument specifying our shared commitments on environmental sustainability.

Finally, the EU-Mercosur agreement is not an end, but a beginning. It marks the beginning of a shared path and creates the necessary institutional framework to facilitate cooperation in a wide range of areas of mutual interest, from the protection of human rights and sustainable development to the regulation of the digital economy and the fight against organized crime. This agreement will boost our relations not only between governments and institutions, but also between parliamentarians, civil society, businessmen, students, universities, scientists and creators.

It is time to abandon short-term tactics. In a world of giants, the EU and Mercosur together represent 10% of the world’s population and 20% of global GDP. If Europe and Mercosur want to be influential, then the EU-Mercosur trade agreement is a strategic imperative. The Brazilian presidency of Mercosur and the Spanish presidency of the EU, which begins in the second half of 2023, offer a great opportunity to inject the necessary momentum into the EU-Mercosur relationship.

Project Syndicate, 2022. www.project-syndicate.org