Without a Pact with Mercosur, the EU risks leaving China free in South America
The agreement EU-Mercosur It has been a banner of the recent protest by French farmers, who denounced unfair competition on the part of South Americans. However, if Paris closes the door to this pact, the way will be left clear to China, warn politicians and analysts consulted by EFE.
The European agricultural crisis, which has been especially prominent in France, has targeted free trade agreements with other economic blocs, but that of Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay and which is yet to be closed, has been the most paradigmatic.
The researcher at the French Institute of International Relations (IFRI) Marie Krpata co-author of a report on the impasse of the EU-Mercosur agreement, points to an increase in China’s economic weight to the detriment of the EU in a region rich in raw materials necessary for the ecological transition, since Argentina and Brazil are among the countries with the most lithium reserves in the world.
For Krpata, defenestrate the agreement with the Mercosur It would further strengthen Beijing’s commercial position, which currently already represents 25% of all exports of the four South American countries, compared to 14% for the EU. The Asian giant is, in fact, the main trading partner of both Brazil and Argentina.
“China positions itself as an alternative for the Mercosur countries, valuing investments and without such strict regulations” like the European ones, Krpata tells EFE.
The researcher recalls that in 2015 Beijing announced investments in Latin America worth US$250 billion until 2025, an amount much larger than that announced by the European Commission (EC), estimated at 45 billion euros in its Global Gateway plan.
“Germany wants diversification, while France defends reindustrialization and European agricultural sovereignty”, explains the specialist.
French wines and cheeses, benefited by the pact
During the last two weeks of agricultural protests there have been very few voices in France in favor of an EU-Mercosur agreement. The macronist deputy Éléonore Caroit, chosen by French voters in Latin America, has been one of them.
“The protection of designations of origin and the elimination of customs duties would be positive for important sectors of French production, such as producers and exporters of wines, cheeses and pharmaceutical products.“, the parliamentarian, who also has Dominican nationality, underlines in statements to EFE.
“This is just one illustration of the disconnect between the fears that the agreement raises in Europe and its economic reality“, remember.
The representative, who makes official trips to South America very frequently, also warns that China’s shadow is long.
One of the most complete studies on the effect of an EU-Mercosur agreement is from the London School of Economics (LSE), which was carried out at the end of 2020, at the request of the European Commission.
In its most conservative projection, it estimated that the EU’s GDP would grow until 2032 thanks to the agreement by 10.9 billion euros (0.1%), while that of the Mercosur would increase by 7,400 million (0.3%). In the most optimistic forecast, the European GDP would rise by 15,000 million and that of the South American bloc, by 11,400 million.
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> The article is available on the 247. NewsAgency website.
> Read the publication of Marie Krpata and Ana Palermo "L’accord UE-Mercosur : un trilemme insoluble ? Entre règles de la concurrence, ambitions normatives et diversification des approvisionnements", Briefings de l’Ifri, October, 3. 2023 (available in French and German).
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Authors
Marie KRPATA
Chercheuse, Comité d'études des relations franco-allemandes (Cerfa) de l'Ifri
