Diana Mondino with Amador Sánchez Rico, European Union Ambassador to Argentina.
The recent establishment of the government under the libertarian leadership of Javier Milei has marked a radical transformation in Argentina's political landscape. In terms of trade agreements, the new administration unequivocally declared its stance against engaging with communist regimes. To strengthen diplomatic ties, Foreign Minister Diana Mondino launched a campaign aimed at consolidating and enhancing relationships with Western nations, with a particular emphasis on rebuilding the deteriorated alliance with the United States, which suffered during the previous leftist administration of Alberto Fernández and Cristina Kirchner.
Without fearing the economic implications, Milei has been a fierce critic of China, arguing that if they want to negotiate with Argentina, they must do so through the private sector. To tip the scales, the new government must use its trump card: the Mercosur - EU free trade agreement, initiated during the presidency of Mauricio Macri (2015-2019). Macri was a pioneer in recognizing Argentina's potential for collaboration with Europe, characterized by his charisma that left a favorable impression on foreign leaders. Additionally, he had the fortune of hosting the G20 summit in Buenos Aires in 2018, seizing the opportunity to engage in dialogue and foster relationships with European leaders, notably Angela Merkel and Emmanuel Macron, whom Macri claimed “fell in love with Argentina.”
Today, six years after that meeting, the international reality has changed profoundly. Firstly, the unexpected COVID-19 pandemic emerged, reconfiguring global productive integration, where efficiency and costs are no longer the only determinants of investment, but also security and resilience factors are taken into account. On the other hand, the Russian invasion of Ukraine has been another shift in the geopolitical landscape, forcing Europe to seek new markets. Establishing and trading with like-minded countries, known as friendshoring, significantly reduces risks. It is the perfect time for Europe to do so, since three of the four Mercosur member states (Argentina, Uruguay, and Paraguay) now have anti-communist governments with a positive view of the European Union.
Securing the Mercosur - European Union agreement would give European industries the opportunity to relocate to South American countries, thereby reducing exposure to potential risks associated with Russia. However, the benefits extend beyond Europe; Mercosur member countries would also significantly benefit. They would gain access to the diverse EU market, expand their export opportunities, and attract foreign direct investment, among other benefits. This “Association Agreement” would involve the integration of a market encompassing 800 million people, representing nearly a quarter of the world's GDP, with bilateral trade in goods and services exceeding 100 billion dollars. Such an association would result in a substantial boost in job creation, fostering economic development in the participating regions.
While there are positive aspects to consider, it is important to recognize the challenges. In Europe, particularly in France, the agreement has faced opposition from farmers who argue that competing with the highly efficient agricultural sectors of Argentina and Brazil would be unfeasible. Notably, negotiations have lasted 22 years, with Mercosur waiting for action from the European Union, fueling impatience among South American leaders like Luis Lacalle Pou, president of Uruguay, who is exploring dialogue with China for potential trade agreements. Similarly, Lula da Silva, president of Brazil, has already taken steps in this direction, aligning with Brazil's membership in the BRICS alliance.
The urgency for Europe to find a consensus regarding the opportunity to collaborate with Mercosur cannot be underestimated. Failing to do so could have significant repercussions for Europe's future in the global economy. Furthermore, there is no guarantee that Mercosur governments will remain open to negotiations with the EU indefinitely. Argentina plays a crucial role in this agreement, particularly since Javier Milei ended the country's participation in the BRICS, an integration effort led by Alberto Fernández. Beyond its clear economic advantages, this association holds importance in reaffirming Western values and addressing the economic and political influence of China and Russia, not only within Mercosur but throughout Latin America.
Carl Moses, an advisor and analyst specializing in South America, expressed his concerns in an interview with DW, stating: "Every day, new nails are driven into the coffin of the treaty. The absurdity lies in the fact that within the European Union, the majority of experts are convinced that Europe urgently needs the agreement more than South America. Despite this, Europe is not taking action." He also highlighted a complaint raised by Greenpeace, an organization warning that this treaty could result in an increase in commercial and maritime transport, potentially harming the climate. This objection is selfish and does not realistically analyze the economic situation. Argentina, Paraguay, and Brazil have high levels of poverty and unemployment, which could be alleviated with this treaty, allowing the creation of millions of new jobs and consequently improving their socio-economic conditions.
The fate of this treaty lies with the European Union as a collective entity, and all indications point to this being its last chance to gain the support of Mercosur. China and Russia have demonstrated greater agility and adaptability in concluding negotiations, resulting in substantial advances in Asia, Africa, and Latin America. However, this also translates into a spread of their ideologies and increased support for them. It is time for Europe to make a definitive decision and cease further delays on a matter that has been on the table for over two decades.
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