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The EU Must Not Give Up on a Mercosur Trade Deal

A trade deal with Mercosur, a resource-rich bloc with a highly productive agricultural sector, could help the European Union accelerate the green transition and improve food security. But if European policymakers continue to drag their feet on negotiations, the four Latin American countries could seek closer ties with China.

ANGERS – Trade negotiations between the European Union and Mercosur (Argentina, Brazil, Paraguay, and Uruguay) began in 1999 and, illustrating the challenges inherent in forging trade pacts among blocs with diverging national interests, resulted in a provisional agreement only in 2019. Since then, efforts to finalize the agreement have floundered. European leaders must recommit to reaching a deal, which will require deft diplomacy.

An EU-Mercosur trade agreement would undoubtedly yield economic gains for both sides. But it also has strategic significance, especially for the EU. At a time when the bloc is wary of depending on China, a trade deal with the world’s fifth-largest economy would allow EU member countries to forge new economic ties, secure the critical resources needed for the green-energy transition, and counter Chinese influence in the region. Moreover, as climate change exacerbates food insecurity, a deal would enable the bloc to diversify its suppliers.

But too many policymakers fail to grasp the benefits of strengthening EU-Mercosur ties. Despite the opportunity presented by Brazil’s Mercosur presidency and Spain’s EU presidency in 2023, an agreement was not reached. But with Brazil’s G20 presidency in 2024, and with Mercosur countries playing an active role in that group, this year could be a watershed for the EU-Mercosur relationship.