Why Europe and Latin America Need Each Other

Project Syndicate / Several Outlets - In the more dangerous and unpredictable multipolar world in which we now live, trade relations remain of seminal 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 highlighted the risks raised by the European Union’s dependence on Russian gas and shown us that this approach is no longer tenable.

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

To make the qualitative leap we need, we will have to strengthen political dialogue at the highest level. But to ensure that our efforts are credible, we must also complete the modernization of 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 Central American countries, and finalize the EU-Mercosur agreement.

While trade plays an important role in all these agreements, none can be viewed as just a trade deal. The most complex of these agreements is the one with Mercosur, which we have been negotiating for more than two decades. The tango might say that twenty years is nothing, but in this case, it is too long.

On a visit to South America last month, I had the opportunity to meet with leaders from Argentina, Paraguay, and Uruguay, which currently holds Mercosur’s rotating presidency. More recently, I congratulated Brazilian President-elect Luiz Inácio Lula da Silva on his election. In all these conversations, the EU-Mercosur agreement was at the forefront. I sought 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 apt. While some would oppose to it – invoking the existence of conflicting interests – there are compelling arguments for finalizing this agreement.

For starters, the EU-Mercosur agreement is much more than a trade deal. It is a deeply political instrument that, by advancing dialogue and cooperation, would seal a strategic alliance between two regions that are among the world’s most closely aligned in terms of interests and values, sharing a similar vision of the kind of societies we want.

Moreover, 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 reliable economic and political partners.

Bringing together two of the world’s largest trading blocs – with a combined population of more than 700 million – the EU-Mercosur agreement would be the largest trade deal that the EU has ever concluded. It would also be Mercosur’s first comprehensive trade agreement, reinforcing the grouping’s integration.

Common rules would open doors between our large markets and generate real opportunities for businesses on both sides, supporting the creation of high-quality jobs in Europe and in Latin America. Recognizing that there is an economic asymmetry in our situations, the agreement specifies that trade would be opened up progressively, thereby giving 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 intend to develop their productive and export capacity, adding value to natural resources through innovation and technology, while adhering to stringent social and environmental standards.

A third argument for the EU-Mercosur agreement lies in its potential to advance climate action and environmental protection. In fact, the political accord the EU and Mercosur reached in 2019 was among the first of its kind to include a reference to the Paris climate agreement. However, in Europe there are doubts about the extent of this commitment, especially in view of the accelerating 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 more international dialogue and cooperation, focused on clarifying shared commitments and building more sustainable value chains.

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

Finally, the EU-Mercosur agreement is not an end, but a beginning. It marks the start of a shared path and creates the institutional framework needed to facilitate cooperation in a wide range of areas of mutual interest, from human-rights protection 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, entrepreneurs, students, universities, scientists and creators.

It is time to abandon short-term tactics. In a world of giants, the EU and Mercosur together represent just 10% of the world’s population and 20% of global GDP. If Europe and Mercosur want to be influential, the EU-Mercosur trade agreement is thus a strategic imperative. Brazil’s Mercosur presidency and Spain’s EU presidency, beginning in the second half of 2023, offer a great opportunity to inject the momentum that the EU-Mercosur relationship needs.