On July 21, the presidents and other high-level officials of Mercosur’s member nations – Argentina, Brazil, Uruguay and Paraguay – met in Mendoza, Argentina to discuss the trade bloc’s next steps for increasing free trade with other regions. Top priorities on the agenda were the finalization of the trade negotiations with the European Union, as well as the continuation of trade talks with the Pacific Alliance, comprised of Chile, Colombia, Mexico and Peru. Mercosur is also aiming to establish strong trade relationships with Japan, India, Australia, and New Zealand.
The Mercosur region has suffered a number of political and economic challenges in recent years; however, the change in leadership in both Argentina and Brazil has opened the doors for rapid advancement of international trade deals and access to foreign markets. An important factor in Mercosur’s motivation to strengthen its trade ties with other countries is the economic recession in Brazil and its significant impact on neighboring countries and Latin America in general. Today, Brazil still faces a long road to recovery as it works through the high magnitude of corruption scandals and government mismanagement.
Another recent obstacle for Mercosur are the events in Venezuela – a full member of the trade bloc since 2012. With Mauricio Macri and Michel Temer in office, Argentina and Brazil voted to suspend Venezuela as a Mercosur member in 2016. On July 21 of this year, Mercosur initiated an open consultation process with Venezuela as required by the Ushuaia Protocol prior to taking any definitive measures against a member country whose institutional order has been disturbed. The foreign ministers of Mercosur are scheduled to meet in Brazil this Saturday, August 5th, to decide what measures to apply, which may include the official suspension of Venezuela’s right to participate in the trade bloc.
Moving forward, Argentina and Brazil hope to reach a deal with the European Union by December of this year, some 20 years after negotiations first commenced. It seems that some of the European governments are equally motivated to finalize negotiations, while others – like the Polish and Irish governments, are less enthusiastic and oppose the inclusion of the agricultural sector in the deal, as they fear that the increased competition will negatively affect local farmers. In parallel, some manufacturing industries in Argentina and Brazil are also against free trade with the European Union. Although a deal remains likely, if not finalized before Brazil’s presidential elections next year, the climate may again become less receptive to open trade between the two regions.