BRAZIL: Political uncertainty threatens Mercosur-EU agreement

Published: 01/12/2018, 1:34:17 PM

The closure of a Mercosur-EU agreement is threatened by political uncertainties in Europe, and negotiators in Germany admit that there is risk that an understanding could be postponed to 2019, according to Brazil's O Estado de S. Paulo newspaper.

The two blocs were close to an agreement in December after 18 years of negotiations. But according to representatives of Mercosur, the European offers for ethanol and meat trade were not enough and negotiations have reached an impasse.

What no one predicted was that the German government would be paralyzed by an inability of Angela Merkel to form a government after the elections. The empty space left by Berlin in Brussels has been occupied by France, one of the most hesitant countries to conclude a trade agreement with Mercosur.

Some European sectors, such as wine producers, want more openness in the trade agreement with the American market, but others, such as the sugarcane industry, reject any offer.

Furthermore, the rotating presidency of the European Union is now occupied by Bulgaria, which has little interest in a trade agreement with Mercosur, because it would represent the entry of agricultural products to compete with its own production in large European markets.

One of the most experienced negotiators in the European bloc, Jean-Luc Demarty, will soon retire, leaving a vacuum in the negotiation process over the next few months.

The South American bloc will also soon face deadlines that could suspend negotiations. Brazil and Paraguay will have presidential elections this year, and should become focused on domestic scenarios as soon as April.

This week, Germany's Secretary of Economy Matthias Machnig warned that if an understanding is not reached by the end of January, the whole process could be frozen and only resume in 2019.