Spain is confident the European Union can finally unlock a free-trade agreement with a group of South American countries including Brazil and Argentina, injecting momentum into a process that has dragged on for decades.
(Bloomberg) — Spain is confident the European Union can finally unlock a free-trade agreement with a group of South American countries including Brazil and Argentina, injecting momentum into a process that has dragged on for decades.
The European Commission shared an initial list of environmental commitments with Mercosur members Brazil, Argentina, Paraguay and Uruguay during a mission to the region this week, Spain’s Trade Secretary Xiana Mendez said in an interview with Bloomberg News. The draft text calls for the South American bloc to comply with preservation commitments, she said.
The EU is Mercosur’s largest trade partner and the biggest foreign investor in the region, and an accord would cover a market of 780 million people. After a political deal in 2019, the trade pact, which needs ratification, stalled on concerns about Brazil’s commitments to protect the Amazon rain forest under the government of former President Jair Bolsonaro.
“I think we can finally sign this trade agreement with Mercosur because the reasons not to go ahead with the agreement were environmental ones, and now this document is going to address them,” Mendez said.
Sharing the draft pledges is the first concrete step in more than three years to pave the way to create one of the world’s largest free-trade zones at a time when Europe is scrambling to cut its dependence on Russian commodities.
An agreement still faces an uphill battle, and at least one member state, France, isn’t happy with the initial green commitments that may not be ambitious enough, according to people familiar with the matter who spoke on the condition of anonymity.
As part of the initial pledges Mercosur members would have to comply with international conventions on environmental protection and labor standards, including limiting deforestation and protecting indigenous communities, Mendez said.
Both blocs could agree on the binding commitments as soon July during a summit of European and Latin American leaders, paving the way for the final sign off of the European Council and EU parliament, Mendez said.
Window of Opportunity
“I believe that Lula now leading the Brazilian government opens a wonderful window of opportunity to advance in something that has ground to a halt since the summer of 2019,” Mendez said.
The left-wing former union boss, Luiz Inacio Lula da Silva, now in his third term as president, and he has said Brazil will work to have the deal inked this year.
Mendez warned that reopening talks to make substantial changes could again delay the deal, which would save both regions about €4 billion in duties each year, according to the commission.
–With assistance from Jorge Valero.
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