Dec 5 2024: South America’s Mercosur bloc and the European Union are racing to finalize a trade agreement that has been in the making for over two decades. Leaders and negotiators are convening in Montevideo, Uruguay, for critical talks, with hopes that the deal could be announced at the upcoming Mercosur summit on December 5-6.
Signs of Progress as Uruguay Hosts EU Commission President
Uruguay’s President has scheduled a meeting with European Commission President Ursula von der Leyen, signaling optimism. Negotiators from Mercosur’s founding members—Brazil, Argentina, Paraguay, and Uruguay—expressed unanimous support for the current terms during a recent round of virtual talks.
Germany and Spain have been key drivers of the deal, but resistance remains from France, which fears the impact of South American agricultural imports on its farming sector. Poland has also joined France’s opposition, but a coalition of 11 EU member states, led by Germany and Spain, supports the agreement, citing the need to diversify trade routes and reduce reliance on China.
Political and Economic Barriers
Despite recent progress, hurdles remain. France is navigating domestic political turmoil following a no-confidence vote, and skepticism persists about whether the deal will move beyond political commitments to ratification.
Brazilian President Luiz Inácio Lula da Silva remains confident, stating last week that negotiations with von der Leyen have advanced significantly. However, analysts warn that even if an agreement is reached, it could face delays in ratification due to procedural and translation requirements across the EU.
Argentina’s Milei and Uruguay’s Role
The summit will also feature Argentine President Javier Milei’s debut on the Mercosur stage. Known for advocating bilateral trade deals outside the bloc, Milei’s stance may be influenced by the outcome of the EU-Mercosur talks. A successful deal could bolster Mercosur’s unity and delay Milei’s push for unilateral agreements.
Uruguay, under President Luis Lacalle Pou, has pursued a free-trade deal with China, though his successor may deprioritize this initiative if the EU agreement moves forward.
Conclusion
While optimism surrounds the Montevideo summit, doubts linger. European officials caution that even a finalized agreement may face lengthy delays before implementation. Ignacio Bartesaghi of Uruguay’s Catholic University warns that while progress is promising, the deal’s true impact will depend on how swiftly it takes effect.
For Mercosur, success could reinforce the bloc’s relevance, while failure might embolden calls for a more flexible or fragmented trade approach.
