EU and Mercosur on the verge of signing important trade agreement

(Patria) - The European Union and the South American bloc Mercosur are expected to announce this week that they have finalized a free trade agreement that took more than two decades to negotiate.

But the agreement still faces a key test in the European Union, where it has faced resistance from France and other members, Reuters reported.

The basic trade agreement could be accelerated with the approval of a simple majority of EU lawmakers and a qualified majority of member states' governments, meaning fifteen countries representing at least 65% of the Union's population. To block the process, at least four EU member states representing more than 35% of the Union's population would have to oppose it.

France will seek to rally opposition and perhaps gain the support of Austria, Poland, and the Netherlands. Together, they account for about 30% of the EU's population, so they would have to find more countries to block the deal. Germany, Spain, and nine other member states, together representing about 40% of the EU's population, have called on negotiators to reach an agreement this year.

The implementation of a broader political agreement between the trade blocs, including new rules for cross-border investments, would likely require the approval of national parliaments in the 27 member states, a much longer process.

The four founding members of Mercosur (Argentina, Brazil, Paraguay, and Uruguay) have signaled their support for the agreement, which each can implement after national legislation approves it.

Leaders have described the agreement as the world's largest trade and investment partnership, bringing together a market of more than 700 million people. Economists estimate that the agreement could eliminate tariffs of four billion euros annually, gradually over several years.

The agreement helps Europe export more cars and industrial products, while ensuring access to minerals crucial for its energy transition. It also lowers trade barriers for South American meat and grains, causing European farmers to protest.

Negotiators agreed on a version of the trade agreement from 2019, which European nations refused to ratify due to environmental concerns after the election of former Brazilian President Jair Bolsonaro. The EU sought assurances on environmental protection policies in a side letter, which Mercosur countries interpreted as new protectionism requiring more concessions in new negotiation rounds.

Recent talks in Brasilia and Montevideo appear to have bridged the gap on environmental protection, government procurement, and other hot issues, paving the way for the signing of a new agreement.