Where is the difficulty?, EU strengthens economic and trade ties with Latin America | Summit | EU

The EU Latin American and Caribbean Community Summit was held in Brussels from July 17th to 18th. The free trade agreements between the European Union and four Southern Common Market countries are the focus of this summit. The free trade agreement has gone through more than 20 years of negotiations and is still progressing slowly to this day. Experts say that both the European Union and Latin America have expectations for strengthening trade cooperation, but multiple conflicts have led to unresolved differences between the two sides. Due to differences in interest preferences and value orientations, it is expected that there will still be strong uncertainty in the free trade agreement.

The agreement has been delayed for many years

The EU Latin American and Caribbean Community Summit has been held again after 8 years, and is highly anticipated by the EU. The website of the Spanish newspaper "The Economist" recently reported that in the current global geopolitical and economic situation, the European Union plans to reunite with its long neglected Latin American partners and vigorously develop economic and political relations with the Latin American region. The EU believes that this year's EU Latin American summit is not only a meeting, but also an opportunity to restore and strengthen EU Latin American ties.

"The EU urgently needs to strengthen its economic and trade ties with Latin America through the summit." The Financial Times recently published an article stating that the EU is currently the third largest trading partner in Latin America. Due to concerns about its declining influence in Latin America and a desire for key mineral resources and renewable energy, the EU is working to reshape its cooperation with Latin American countries.

The analysis points out that rebuilding mutual trust between the European Union and Latin America and promoting the implementation of the free trade agreement between the European Union and the Southern Common Market will be a landmark action.

"The best measure for the EU to achieve a 'qualitative leap' in economic and trade relations with Latin America is to facilitate a free trade agreement with the Southern Communist Party," reported the Deutsche Welle radio website recently.

According to a report by Effe News Agency, a major unknown factor in this summit is whether it can advance the free trade agreement with the Southern Communist Party. This agreement is a strategic priority between the European Union and Latin America.

The Southern Common Market, composed of four countries: Brazil, Argentina, Uruguay, and Paraguay, is an important economic integration organization in Latin America. According to data from the International Monetary Fund and the World Bank, as of 2022, the total population of Mercosur is about 290 million, with a gross domestic product of nearly 5.2 trillion US dollars, accounting for approximately 77% of the Latin American region's gross domestic product. After the free trade agreement with the European Union takes effect, both sides are expected to build the world's largest free trade area.

However, the free trade agreement has recently come to a standstill. In March of this year, the European Union proposed additional conditions to the free trade agreement, requiring the Southern Communist City to commit to reducing deforestation and exporting products that comply with EU environmental requirements. If the commitment is not followed, the EU will not approve the agreement and has the right to initiate sanctions.

This request has sparked strong opposition from countries such as Brazil and Argentina. On July 4th, during the 62nd summit of the Communist Party of South China, Brazilian President Lula stated that the environmental additional conditions unilaterally proposed by the European Union are "unacceptable" and the two sides should negotiate for mutual benefit.

For many years, the negotiations on a free trade agreement between the European Union and the Southern Common Market have been tumultuous. In 1995, the European Union and the Southern Communist Party began preparations for the establishment of a free trade zone. In 1999, the consultation was officially launched. In 2004, negotiations between the two sides were terminated due to serious disagreements over market access for agriculture and industrial products. In 2010, negotiations resumed, but progress remained slow. In 2019, the European Union and Mercosur announced an agreement on a free trade agreement, entering the text review stage. At present, the agreement still needs to be approved by the parliaments of the contracting countries before it can come into effect. After taking effect, tariffs on some agricultural products exported by the Southern Communist City to the European Union will be cancelled, and most industrial products exported by the European Union to the Southern Communist City will also be exempt from tariffs.

Both sides have deep differences

"More than 20 years have passed, and the EU South Common Market Free Trade Agreement is still waiting for approval." The Financial Times of the UK stated that "the additional environmental protection conditions recently proposed by some EU member states are almost undisguised agricultural protectionism in the eyes of Latin American countries." The analysis pointed out that environmental issues are a key factor affecting the progress of the EU South Common Market Free Trade Agreement.

According to Agence France Presse, many EU countries, including France, believe that the free trade agreement will inevitably lead to large-scale deforestation and expansion of agricultural land in countries such as Brazil and Argentina, in order to cultivate more food and raise more cattle and sheep, and export more agricultural products to Europe. French experts in the fields of economics, law, and flora and fauna have also submitted an assessment report to the French Prime Minister's Office, stating that once the free trade agreement is implemented, the area of the Amazon rainforest will decrease by 5% annually for the first six years.

"The additional environmental conditions proposed by the European Union have provoked resentment from Latin American countries," said Sun Yanfeng, Deputy Director of the Institute of Latin American Studies at the China Institute of Modern International Relations. Brazil and other countries believe that the environmental conditions proposed by the European Union have added additional costs to product exports and violated the commercial interests of Latin American countries.

"After Lula took office, he took many measures to protect the Amazon rainforest and made further commitments. The EU turned a blind eye to this and still held a critical attitude towards its forest conservation work, leading to disagreements between the two sides." said Cui Shoujun, a professor at the School of International Relations at Renmin University of China.

The unilateral sanctions proposed by the European Union have further intensified the conflict. Sun Yanfeng stated that the EU's proposal to retain unilateral punishment for products that do not meet environmental requirements is seen by Latin American countries as a threat to their sovereignty.

Cui Shoujun stated that the Green Party, with environmental protection as its political appeal, has continuously emerged in the European political landscape in recent years, impacting the EU's foreign relations. Currently, the Green Party has 26 member parties in 23 EU member states. With the expansion of environmental politics, radical environmental movements and green waves are rapidly spreading in European countries. In this context, the collision between the values of "environmental priority" in the European Union and "development priority" in Latin America has constrained the negotiations.

The internal differences between the two regional organizations have also affected the progress of the free trade agreement.

"At present, there are significant differences in the interests and demands of EU member states, and the control and coordination capabilities of France, Germany, and Spain are declining, especially their influence on some Central and Eastern European countries continues to decline. Even if new agreements are reached, it will be difficult for all countries to approve them on time." Sun Yanfeng said.

"Compared with the European Union, the degree of integration of the Southern Communist City is relatively low, and there are still many differences between the two major countries, Brazil and Argentina, on issues such as common tariffs, which has affected the unified dialogue with the European Union," said Cui Shoujun.

The slow progress of the free trade agreement reflects to some extent the imbalance in the economic and trade relations between the two sides.

The German newspaper Business Daily reported that France, Belgium, the Netherlands, Austria, and Ireland have refused to accept the current treaty text, fearing that importing cheap beef from Latin America will affect local agriculture in Europe. The website of Deutsche Welle Radio also reported that many European farmers believe that importing more meat from Latin America will threaten their livelihoods.

"The EU is concerned that agricultural products from Latin American countries will impact the EU's major agricultural countries, while Latin American countries are concerned that EU industrial products will undermine their local industrial base. This structural contradiction has made negotiations between the two sides difficult and low in mutual trust." said Sun Yanfeng.

"There are significant differences between the European Union and Latin America in terms of comprehensive strength, development level, value orientation, and international status. This asymmetric structure leads to imbalanced political and economic relations between the two sides, and there are still many conflicts between the two sides in terms of interests and value orientation, which affects the progress of the free trade agreement," said Cui Shoujun.

Faced with uncertainty

Despite differences, both sides of the EU and the EU still have the willingness to strengthen dialogue.

Sun Yanfeng stated that the EU and Latin America share the same cultural heritage, close economic and trade ties, and a common stance of unwillingness to choose sides. Lula's inauguration brings an opportunity for improvement in Latin American Europe relations, and the EU hopes to rebuild strategic cooperation with Latin America. Mercosur is an important integration mechanism in Latin America, and the EU hopes to leverage the EU Mercosur Free Trade Agreement to create a model for cooperation between Europe and Latin America, highlighting the growth of the EU's "partnership circle".

"In the face of a backlash against globalization, cross regional cooperation between the European Union and the Southern Communist Party has positive significance. Currently, pragmatic forces within the EU advocate accelerating the negotiation process, responding to post pandemic economic weakness, and stimulating European economic recovery. The Southern Communist Party also holds a positive attitude towards promoting consultations," said Cui Shoujun.

To translate good intentions into tangible results, both sides still face many uncertainties.

Latin American News Agency reported that although South American countries are willing to continue to promote the free trade agreement with the EU, they believe that the content of the agreement is "not fair enough".

The German newspaper "Youth World" stated that it remains to be seen whether Europe can effectively invest. Over the past decade, the EU's Latin American policy has shown strong inertia, leading to a stagnation in the EU Latin American relationship. Now, the European Union is launching another diplomatic and trade offensive against Latin America, which may only be an overdraft of the EU's decreasing power.

Delaying for a long time may also add new variables. According to a report by the US Political News Network, the EU South Comintern Free Trade Agreement is in a valuable "window period". Spain, the rotating presidency of the European Union, and Brazil, the rotating presidency of the Latin American Community, are both supporters of the free trade agreement, creating favorable conditions for its eventual passage. Once the Argentine presidential election is postponed until October or the European Parliament elections in 2024, the negotiation of the free trade agreement may change again.

Cui Shoujun stated that the rise of radical environmentalist forces in the European Union still poses a challenge to cooperation between the two sides. Affected by environmental issues as the biggest constraint, it is expected that there is still a lot of content to be negotiated in the free trade agreement.

"In response to the environmental additional conditions proposed by the European Union, the Southern Communist Party of China, under the coordination of the rotating presidency Brazil, is accelerating its coordination position and proposing a unified response from the Southern Communist Party. Currently, Brazil and Argentina hold a stronger stance and demand a compromise from the EU, while Uruguay hopes to accelerate negotiations. Whether the free trade agreement negotiations can be reached in the near future remains to be seen," said Sun Yanfeng.