EU fears dropping affect in Latin America with weak commerce offers

Amazon deforestation concerns hamper negotiations with Brazil on Mercosur pact

The president of the European Commission has promised a firmer trade policy to fight China’s global influence. But when Ursula von der Leyen announced her plans, she didn’t mention the stalled trade pact with Mercosur, Latin America’s biggest trading bloc.

Speaking in Strasbourg this month, Von der Leyen said he will present trade agreements with Mexico, Chile and New Zealand for ratification by the European Parliament and member states and will continue talks with Australia and India.

But the comprehensive 2019 pact with the South American bloc of Mercosur was ignored. Mercosur includes Brazil and Argentina, two of the largest economies in a region where Chinese trade and investment have grown significantly over the past two decades.

Brussels awaits election results in Brazil

Brussels awaits the outcome of Brazil’s presidential election in October, insisting that Brasilia sign a separate pledge to protect the Amazon before ratifying the Mercosur deal.

Polls suggest leftist Luiz Inácio Lula da Silva will defeat right-wing populist Jair Bolsonaro, who has strained relations with most European Union leaders over his failure to curb deforestation and support indigenous peoples’ rights.

But the lack of progress has worried Josep Borrell, the EU’s foreign policy chief. In July, the Spaniard prepared a confidential document for foreign ministers, seen by the Financial Times, which mapped the need for a “qualitative leap in relations” with Latin America and the Caribbean within 18 months.

He warned of a “sense of EU disengagement”. The failure to conclude trade deals “has undermined the EU’s credibility”, while “China’s presence and influence in the region has increased exponentially”.

While Lula generally favors closer ties with the EU, one of his close allies told the Financial Times that a new Lula administration would try to renegotiate parts of the Mercosur deal.

Lula, who was president for two terms from 2003 to 2010, considers the partnership with the EU “strategic for Brazil and Latin America,” said Celso Amorim, his chancellor at the time.

But Amorim, who advised Lula on foreign policy after leaving office, said a Lula administration is likely to “want some adjustments” to the pact’s text and has concerns about areas such as intellectual property protection and government procurement. “We want to make sure that nothing will stop Brazil’s technical or industrial development,” he said. “We don’t want to continue being just producers of raw materials.”

Any changes would need to be agreed upon by Brazil’s Mercosur partners –Argentina, Uruguay and Paraguay–, as well as by the 27 EU member states.

A Lula government, Amorim added, will be open to the changes desired by Europeans to strengthen clauses on climate and human rights, “as long as this does not interfere with Brazilian sovereignty.”

Lula suggested last month that the EU-Mercosur treaty is unfavorable to Brazil in some areas. “Negotiations must be something where everyone wins… What we want in the discussion with Europe is not to give in in our interest to re-industrialize [o Brasil]”, he told foreign journalists.

However, an EU official said re-discussing a deal that took years to complete would be a “nightmare”, especially as many member countries have become more skeptical about new trade deals since 2019.

Pedro Miguel da Costa e Silva, Brazil’s ambassador to the European Union, said Brazil has signed all relevant international treaties: “You shouldn’t do the hostage agreement because you have these other issues,” he said in an interview.

Brasília could discuss signing a joint agreement to curb deforestation, but it must be “balanced and equitable,” he said, noting that his country has other stakeholders. “The strategic partnership we established with the EU is inactive. Latin America is off the map for the EU.”

War in Ukraine showed EU needs more allies in LA

Mercosur’s stalled deal is not the only problem in the EU’s trade relations with Latin America.

A trade and partnership agreement with Mexico has not been ratified for four years due to concerns in Europe about environmental and labor rights. Chile is still awaiting approval after Paris blocked the deal with the EU over French farmers’ concerns about rising chicken imports.

EU Trade Commissioner Valdis Dombrovskis will travel to Latin America later this year. An EU official, speaking on condition of anonymity, said the war in Ukraine had demonstrated that the EU needed a wider range of allies, especially democratic countries in Latin America.

“If you want to win votes at the UN, you can’t just rely on the EU, the US, Canada, South Korea and Japan. We need to work with many other countries.”

Latin America, a major producer of copper and lithium, is also a source of vital minerals for the EU’s green energy transition.

“Africa is already leased to China because they have been more strategic than democracies. We cannot allow the same to happen to Latin America,” the official said.

Javi López, a Spanish socialist who chairs the European Parliament delegation to Latin America, said an electoral victory for Lula would be a vital opportunity to establish better relations.

“We are good friends, but we need to invest time and political capital if we are to be allies,” he said, adding that there has not been an EU-Latin America summit in seven years.

“The Amazon is being used as an excuse to stop trade. Some countries [da UE] are protecting their agricultural industries.”

The commission said the agreements with Mexico and Chile could be presented for ratification to member states and the European Parliament later this year. As for the pact with Mercosur, he added: “We hope to engage with the Brazilian authorities, as well as with the other Mercosur countries, to bring the ongoing process to a successful conclusion.”

Source: Leaf