After two decades of negotiations and a backdrop of rising global protectionism, the European Union and the South American trade bloc, Mercosur, have reached a monumental trade agreement. The EU-Mercosur deal, reached between Brazil, Argentina, Uruguay, Paraguay and the EU, has the goal of forging closer commercial ties between the nations, who have combined trade and services worth over $1 trillion.
Under the agreement, tariffs worth billions of dollars would be eliminated in the two regions, benefiting a multitude of products—including German cars and Argentine steak—that represent a quarter of global gross domestic product. The Argentine Foreign Ministry claims that the deal would integrate a market of 800 million people, and generate more than $100 billion in bilateral trade of goods and services. Brazil’s President, Jair Bolsonaro, said the deal would create a “domino effect,” encouraging other countries to negotiate with Brazil.
While the trade agreement has mostly been regarded as a monumental step in opening up Latin American markets, it didn’t come without controversy. France, in particular, has questioned the environmental effect it could have on the planet and questioned if it would allow participating countries to meet their Paris Agreement requirements. French President Emmanuel Macron has threatened to not sign the deal if President Bolsonaro pulls out of the Paris climate accord, as he has threatened to do in the past. The agreement has not been ratified yet, but as Nicolás Albertoni writes for Global Americans, that’s where the real challenge may come.