CANUELAS, Argentina (AP) — Talks about groundbreaking free trade agreement Relations between the European Union and the four South American countries began so long ago that the euro was not yet in circulation, China was not yet a member of the World Trade Organization, and Venezuela remained the United States’ largest oil supplier.
However, against a completely different geopolitical background and grim outlook, Backlash from a powerful protectionist lobby — known as the EU and South American Alliance Mercosur expected to officially sign Under development for a quarter of a century The trade agreement was signed in a ceremony in Paraguay this Saturday.
This is the first major trade deal for Mercosur, which joins the region’s two largest economies, Brazil and Argentina, with Paraguay and Uruguay. Bolivia, the newest member state, is not participating in the negotiations but could join the agreement within the next few years.
of transatlantic trade agreement — Tariff hikes on products ranging from Argentine steaks and Brazilian copper to German cars and Italian wine still need to be ratified european parliament.
The importance of creating the world’s largest free trade area, home to over 700 million people and accounting for a quarter of the world’s gross domestic product. President Donald Trump pull the usa drop out of the international economy Nothing is lost for the signatories.
For now, it’s not a Trump vs. China issue.
President of the European Commission Ursula von der Leyen He last week praised the agreement as a strong endorsement of multilateralism “in the face of an increasingly hostile and transactional world.” president of brazil Luiz Inacio Lula da Silvathe 80-year-old called it “a rare victory for the bet on dialogue, negotiation and cooperation.”
Experts say that victory came at the expense of the United States and China due to President Trump’s aggressive attack. assert American authority In areas rich in resources, Beijing takes advantage of large-scale trade and loan To build influence.
“This is a sign that South American economies are trying to escape great power competition from the United States and China,” said Lee Schlenker, a research fellow with the Global South Program at the Quincy Institute for Responsible State Planning, a think tank in Washington.
“This shows that South America can continue to be a force in the international realm, diversify its trading partners and exercise a level of autonomy that is often denied.”
Ranchers in South America also rejoice.
The agreement grants South American countries, known for their fertile land and skilled farmers, greater access to Europe’s vast agricultural markets at preferential tax rates.
Here in Argentina, exporters expect to save tens of millions of dollars a year thanks to a deal that immediately eliminates a 20% tariff on the EU’s long-standing quota system for high-quality meat imports.
This is a milestone for Argentina, a country that has been dominated for decades. left-wing populist government that maintained the economy closed Priority was given to the domestic market, including imposing taxes on agricultural exports to keep food prices down.
“We are in the midst of a paradigm shift here,” said Carlos Colombo, president of the Cañuelas Cattle Market in Buenos Aires. More than 12,000 cattle are sold every day at the market, many destined for Europe and China. “Argentina has reopened its heart to the world.”
Argentina’s President Javier Millei may be Trump’s most powerful figure ideological allies in Latin America — share about him contempt for the United Nations and paris climate agreement — But no one calls radical libertarians “libertarians.” protectionist.
At the beginning he scoffed Mercosur, notoriously slow-moving, was irrelevant and threatened to abandon it. But he changed his tune after realizing the bloc’s potential to wipe out tariffs and eliminate customs red tape.
“He sees this agreement as a way to revitalize and re-sign Mercosur,” said Marcelo Elizondo, an Argentine economic analyst specializing in international trade.
Free trade fever is also affecting Brazil’s long-shut down economy. Apex, the Brazilian government’s investment agency, estimates that agricultural exports to the EU, such as instant coffee, poultry meat and orange juice, will collect $7 billion in the next few years.
Europe’s farmers lobbies gain concessions
Farmers, squeezed by environmental regulations and fearful of a flood of cheap food from across the Atlantic. closed highway and landed on the street Anger over the deal exploded in European capitals.
EU scrambles to allay concerns over decades of negotiations, adding environmental protection and animal welfare Safeguards for agreements And it has imposed strict quotas on South American meat and sugar exports to ensure the competitiveness of domestic agricultural products.
Farmers still angry finally persuaded FrancePoland and several other countries opposed the deal in an EU vote last week, depriving supporters of the deal what they had hoped would be a show of solidarity. Only Italy and other large agricultural countries came After the EU provided farmers with generous subsidies of $52 billion.
“This is a huge bribe,” said Jacob Funk Kierkegaard, a nonresident senior fellow at the Peterson Institute for International Economics. “EU leaders have decided that this agreement is so important that it is worth it at this time.”
“Cow for cars”
Some are calling the deal a “car cow”, reflecting the view that Europe’s auto industry will also win big.
destroyed by Intensifying competition China and sky high us tariffsProud German car giants such as Volkswagen and BMW are delighted with the boost, while European producers in the pharmaceutical, construction and machinery sectors also gain access to hundreds of millions of consumers.
Experts say the removal of 35% tariffs on auto parts and cars will give European industrial exporters a unique chance to win back South American market share from cheaper Chinese rivals.
“The failure to sign the EU-Mercosur free trade agreement risked pushing Latin American economies closer to Beijing’s orbit,” said Agathe Desmarais, senior policy researcher at the European Council on Foreign Relations.
However, many people still watch with bated breath as negotiations stall for years, only to falter at the last minute.
“We still have to take some steps. Europe continues to be very careful,” Colombo said, over the sounds of groaning cowboys pushing hundreds of cows onto trucks.
“Remember, this is historic. We’ve never reached an agreement like this before.”
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Associated Press writer Mauricio Savarese in Sao Paulo contributed to this report.
