What Happened: In a June 20 letter to the European Commission, the leaders of Germany, Sweden, the Netherlands, Spain, Portugal, the Czech Republic and Latvia expressed their support of Brussels’ intention to close on a “balanced and reasonable” free trade agreement with the South American trade bloc Mercosur, Politico reported June 26.
Why It Matters: The seven, pro-Mercosur EU members are trying to make as much progress in getting a deal in place before the European Commission’s current legislative session ends, likely around September. Adding to the time crunch is the potential for Argentina’s presidential election in October to produce a new populist government, which would be less willing to sign a trade agreement with Europe. However, the European Union’s ratification would likely require unanimous support among its members, meaning that the anti-Mercosur camp (which includes France, Poland and Ireland) still stands a good chance of killing the deal.
Background: The European Union has been in talks with the countries of Mercosur (Argentina, Brazil, Paraguay and Uruguay) for two decades over a possible trade deal. While most aspects of the agreement have been agreed upon, the final ratification continues to be postponed due to several outstanding issues and internal divisions in Brussels. The pro-agreement EU countries believe they stand to benefit from greater access to the South American countries’ industrial markets, while the anti-agreement EU faction fears their agricultural sectors could be hurt by the Mercosur members’ highly competitive agri-food exports.
Information provided by stratfor.com