BRASILIA: Mercosur, the customs union consisting of Brazil, Argentina, Uruguay, Paraguay and Venezuela, may soon heighten its efforts to craft a trade deal with the European Union. Mercosur’s next summit, to be held July 16-17 in the Brazilian capital, comes amid increasing conflict within the bloc over negotiating trade deals with external parties, particularly with the European Union. However, the second half of the year could see greater movement toward a free trade agreement between Mercosur and the European Union, with Brazil playing a more active role in expanding Mercosur’s trade prospects and relationships.
Mercosur’s upcoming summit will include several notable components, but the most controversial agenda item will be the discussion of increased flexibility for Mercosur in negotiating free trade agreements with third parties.
The topic has been a source of significant dispute among Mercosur member states, particularly in the context of negotiating a free trade agreement with the European Union. The blocs — two of the four largest trade unions in the world — have held free trade talks regularly since 2010. But not all Mercosur members are aligned: Argentina is concerned that EU goods might undermine its own domestic industry, while Uruguay is eager to expand its export markets and has thus advocated accelerating negotiations. Mercosur law stipulates that its members must negotiate any free trade deals as a bloc rather than individually (except free trade deals with Mexico), so such internal disagreements have hindered progress toward a deal with the European Union. But Uruguay has pushed for a revision to the law, favoring instead a two-speed process in negotiations with the European Union that would allow some Mercosur members to proceed in trade talks more quickly than others.
Nevertheless, the expansion of trade with the European Union has clearly taken on greater importance for Brazil and other members of Mercosur. Economic growth in the region is slowing, and political change is coming in Argentina. At the same time, the entire bloc feels a need to anticipate any regulatory changes that may come with a potential Trans-Atlantic Trade and Investment Partnership agreement between the European Union and the United States. Mercosur is thus likely to spend the next few months actively pursuing an eventual trade deal with the European Union.
