Argentina and Brazil, two of South America’s largest economies, expressed their dissatisfaction with the European Union’s (EU) stance on negotiations with the Mercosur bloc regarding a long-delayed free trade deal. The EU has raised concerns about environmental issues, leading to the delay in finalizing the agreement.
After two decades of challenging negotiations, the Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) reached a preliminary agreement with the 27-member EU in 2019. However, the EU has now proposed additional environmental requirements in the form of a “side letter” to the agreement, which has raised suspicions among South American leaders about protectionism.
During a two-day summit held in Puerto Iguazu, Argentina on Tuesday, the leaders of the Mercosur countries responded to the EU’s latest proposal. Luiz Inacio Lula da Silva, Brazil’s representative, deemed the proposal “unacceptable” and criticized the EU for negotiating with distrust and the threat of sanctions. He emphasized that they were not interested in agreements that would restrict them to being mere exporters of raw materials and oil.
Argentine President Alberto Fernandez echoed Lula’s sentiments, stating that they should not be condemned to supplying raw materials that others would industrialize and sell back to them at exorbitant prices. Fernandez also criticized the EU’s partial vision of sustainable development, which overly focuses on environmental aspects.
The heads of state meeting on Tuesday, following a ministerial gathering on Monday, was attended by the presidents of Uruguay, Paraguay, and Bolivia. Bolivia, aspiring to join the Mercosur trade bloc, also participated in the discussions.
Mercosur, founded in 1991, represents a significant portion of South America’s population (62 percent) and gross domestic product (67 percent). The trade deal between Mercosur and the EU faced obstacles during the 2019-2022 presidency of Jair Bolsonaro, Brazil’s former far-right leader, as deforestation in the Amazon increased.
Although Lula, a veteran leftist, has positioned himself as an advocate for environmental policy, he expressed concerns about the additional environmental guarantees raised by the EU during a meeting with Ursula von der Leyen, the President of the European Commission, in June. Lula stressed that no one has the moral authority to discuss clean energy with Brazil.
Josep Borrell, the EU’s top diplomat, recently acknowledged that the environmental proposals did not receive a warm reception from the South American countries. He stated that Europe is awaiting a concrete response from Mercosur.
Lula’s government is preparing a counter-proposal, which they plan to present at a summit of the EU and the Community of Latin American and Caribbean States (CELAC) scheduled for July 17 and 18 in Brussels. Lula, who has assumed the rotating presidency of Mercosur until the end of the year, emphasized the importance of a swift and strong response from Mercosur.
