{"id":3603,"date":"2024-12-09T12:47:29","date_gmt":"2024-12-09T11:47:29","guid":{"rendered":"https:\/\/blogg.lnu.se\/china-research\/?p=3603"},"modified":"2024-12-09T12:47:31","modified_gmt":"2024-12-09T11:47:31","slug":"the-eu-mercosur-free-trade-agreement-welcome-but-not-without-problems","status":"publish","type":"post","link":"https:\/\/blogg.lnu.se\/china-research\/?p=3603","title":{"rendered":"The EU-Mercosur free trade agreement &#8211; welcome but not without problems"},"content":{"rendered":"\n<p>The EU and the five active Mercosur countries \u2013 Brazil, Argentina, Uruguay, Paraguay and since recently Bolivia &#8211; finally made it, quite surprisingly when the trade deal with the EU really happened; highly desired by many corporations &#8211; but it took 25 years of trade talks to get there (<a href=\"https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_24_6245\">https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_24_6245<\/a>). Initial reactions were mostly positive but not unisono. A number of obstacles for a good development of the agreement still have to be eliminated or improved, both in the short and the longer run.<\/p>\n\n\n\n<p><strong>Some (still) opposing EU countries<\/strong><\/p>\n\n\n\n<p>It is generally expected that the new free-trade agreement will be particularly beneficial to EU countries when it comes to the export of investment goods, cars, pharmaceuticals, many services and other products with currently high tariffs. For Mercosur countries, particularly exports of agricultural products and critical minerals to the EU promise to become more attractive &#8211; however, some EU countries with still large agricultural production certainly dislike the new trade agreement. Altogether, there are particularly three striking problems to be tackled.<\/p>\n\n\n\n<p><strong>Problem no 1: To get the EU to join the deal<\/strong><\/p>\n\n\n\n<p>It certainly won\u2019t be an easy call to convince reluctant EU countries with a relatively high share of agricultural production such as France, Italy, Poland and the Netherlands to join the agreement with Mercosur. This trade agreement must be approved by 15 of the 27 EU states which totally must represent 65 percent of the whole EU population. A simple majority by the European Parliament is also needed.<\/p>\n\n\n\n<p><strong>Problem no 2: Exaggerated expectations directly after such a deal.<\/strong><\/p>\n\n\n\n<p>I remember quite well the strongly positive expectations for mutual trade gains from previous (free) trade agreements that covered other geographic areas. However, in most of these cases very positive predictions never came true or it took a long time until major achievements could be noticed. For example, the big Southeast Asian &amp; Pacific trade deal by the name of Regional Comprehensive Economic Partnership (RCEP,&nbsp;<a href=\"https:\/\/crsreports.congress.gov\/product\/pdf\/IF\/IF11891\">https:\/\/crsreports.congress.gov\/product\/pdf\/IF\/IF11891<\/a>) from 2020 still remains quite unobserved; despite the fact that the member countries \u2013 with China on the top \u2013 stand for almost 30 percent of global GDP.&nbsp; Limited enthusiasm for the RCEP can be particularly referred to poor customs administration, delivery delays and lack of transparency. Thus, a main objective for the EU-Mercosur agreement should therefore focus on acceptable or good institutional conditions. This may be difficult.<\/p>\n\n\n\n<p><strong>Problem no 3: Economic imbalances and weak growth in Mercosur countries<\/strong><\/p>\n\n\n\n<p>When looking at the two largest Mercosur countries &#8211; Brazil and Argentina &#8211; they have been characterized by really disappointing growth performances in the past decades, Argentina even more than Brazil. Varying changes of economic policy regimes have not helped so far. Both countries have been underperforming during many years. Thus, potential growth is quite low in Mercosur countries. Reforms of the institutional framework are badly needed. The EU &#8211; Mercosur deal may hopefully speed up necessary improvements, also when it comes to productivity.<\/p>\n\n\n\n<p><strong>Summary:&nbsp;<\/strong>The EU-Mercosur agreement can be interpreted as an important signal to the opponents of free trade \u2013 but has its limits due to Brazil\u2019s and Argentina\u2019s insufficient growth performance. Hopefully, future policy changes will improve the growth outlook.<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img decoding=\"async\" src=\"https:\/\/lnu.se\/api\/media\/12178-fw350fh461cy28cw350ch350\" alt=\"\" style=\"width:94px;height:auto\" \/><\/figure>\n\n\n\n<p><strong><em>Hubert Fromlet<\/em><\/strong> <br>Affiliate Professor at the School of Business and Economics, Linnaeus University<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The EU and the five active Mercosur countries \u2013 Brazil, Argentina, Uruguay, Paraguay and since recently Bolivia &#8211; finally made it, quite surprisingly when the trade deal with the EU really happened; highly desired by many corporations &#8211; but it took 25 years of trade talks to get there (https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_24_6245). Initial reactions were mostly positive [&hellip;]<\/p>\n","protected":false},"author":126,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[545,18943,13398,10503],"tags":[],"class_list":["post-3603","post","type-post","status-publish","format-standard","hentry","category-argentina","category-brazil-and-mexico","category-china-2","category-other-emerging-markets"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>The EU-Mercosur free trade agreement - welcome but not without problems - China Research<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/blogg.lnu.se\/china-research\/?p=3603\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"The EU-Mercosur free trade agreement - welcome but not without problems - China Research\" \/>\r\n<meta property=\"og:description\" content=\"The EU and the five active Mercosur countries \u2013 Brazil, Argentina, Uruguay, Paraguay and since recently Bolivia &#8211; finally made it, quite surprisingly when the trade deal with the EU really happened; highly desired by many corporations &#8211; but it took 25 years of trade talks to get there (https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_24_6245). Initial reactions were mostly positive [&hellip;]\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/blogg.lnu.se\/china-research\/?p=3603\" \/>\r\n<meta property=\"og:site_name\" content=\"China Research\" \/>\r\n<meta property=\"article:published_time\" content=\"2024-12-09T11:47:29+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2024-12-09T11:47:31+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/lnu.se\/api\/media\/12178-fw350fh461cy28cw350ch350\" \/>\r\n<meta name=\"author\" content=\"Hubert Fromlet\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hubert Fromlet\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/?p=3603\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?p=3603\",\"name\":\"The EU-Mercosur free trade agreement - welcome but not without problems - China Research\",\"isPartOf\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\"},\"datePublished\":\"2024-12-09T11:47:29+00:00\",\"dateModified\":\"2024-12-09T11:47:31+00:00\",\"author\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/3c3b67b85e96d1cc89d09dda3a189b38\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/blogg.lnu.se\/china-research\/?p=3603\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/\",\"name\":\"China Research\",\"description\":\"A discussion forum on emerging markets, mainly China  \u2013                                          from a macro, micro, institutional and corporate angle.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/blogg.lnu.se\/china-research\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/3c3b67b85e96d1cc89d09dda3a189b38\",\"name\":\"Hubert Fromlet\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?author=126\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The EU-Mercosur free trade agreement - welcome but not without problems - China Research","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/blogg.lnu.se\/china-research\/?p=3603","og_locale":"en_US","og_type":"article","og_title":"The EU-Mercosur free trade agreement - welcome but not without problems - China Research","og_description":"The EU and the five active Mercosur countries \u2013 Brazil, Argentina, Uruguay, Paraguay and since recently Bolivia &#8211; finally made it, quite surprisingly when the trade deal with the EU really happened; highly desired by many corporations &#8211; but it took 25 years of trade talks to get there (https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_24_6245). 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