Mercosur calls for updating trade deal with EU

(Patria) - South American trade bloc Mercosur on Monday opened a two-day summit with host Argentina calling for an update to a long-stalled trade deal with the European Union, AFP reported

Observers have low expectations of the summit's ability to offer a final shape to a pact that has stalled due to EU concerns over environmental protection, particularly in
the Brazilian Amazon. Deforestation had increased during the tenure of former Brazilian president Jair Bolsonaro, and newly elected Luiz Inacio Lula da Silva has pledged to reduce it.

The Mercosur countries Argentina, Brazil, Paraguay and Uruguay reached a framework agreement with the EU in 2019, after two decades of negotiations. The EU has since proposed a "side letter" to the agreement with additional environmental guarantees. Brussels wants any deal with Mercosur countries to include adherence to commitments made under the 2015 Paris Climate Agreement.

On Monday, Argentine Foreign Minister Santiago Cafiero said that
deepening ties between Mercosur and the EU is "essential in an international context of conflict and growing uncertainty." However, for this to happen, the 2019 draft agreement needed to be "updated" because, "it reflects unequal efforts between asymmetric blocs," he told fellow ministers gathered in Puerto Iguazu. He pointed out that under the draft agreement, Mercosur would eliminate tariffs on 95 percent of agricultural imports from the EU, and the EU on 82 percent.

He said the agreement in its current form had an excessive focus on environmental issues at the expense of economic and social considerations.

The ministers met ahead of a Tuesday meeting between Argentine President Alberto Fernandez and his counterparts from Uruguay, Paraguay and Brazil: Luis Lacalle Pou, Mario Abdo Benitez and Luiz Inacio Lula da Silva. The bloc, founded in 1991, represents 62 percent of South America's population and 67 percent of the continent's gross domestic product.

Lula has led criticism of the EU's environmental demands, telling reporters last month that "strategic partners should have a relationship of mutual trust, not distrust and sanctions." He told European Commission chief Ursula von der Leyen in June that he had concerns about the additional environmental guarantees. Lula accused EU lawmakers of trying to legislate "outside their territory" with measures that "change the balance of the agreement." Brazil will assume the rotating presidency of Mercosur by the end of the year.

A senior EU diplomat, Josep Borrell, recently acknowledged that the environmental proposals have not been well received by South American countries and said Brussels is awaiting a concrete response.