Brussels Approves EU-Mercosur Trade Deal Signing
Welcome back to world Brief, where we’re looking at the economic impact of the European Union-Mercosur trade deal, Russia‘s hypersonic threat to Ukraine and NATO, and mass protests in Iran.
Major Win or Cause for More Unrest?
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The European Union gave the green light on Friday to a trade deal with South America’s Mercosur bloc, overcoming 25 years of drawn-out negotiations to create one of the largest free-trade zones in the world. Although the deal’s key European backers, such as german Chancellor Friedrich Merz and European Commission President Ursula von der Leyen, are trumpeting the agreement as a win, analysts suggest that the accord’s economic impact on the continent will be minimal at best-and could spark further political unrest at worst.
The European Union and Mercosur-a trade bloc comprising Argentina, Brazil, Bolivia, Paraguay, and Uruguay-reached a political agreement on a free trade deal after more than two decades of negotiations.The deal, finalized on Friday, aims to eliminate tariffs on a wide range of goods, boosting trade between the two regions.
The agreement comes at a time when the EU is seeking to diversify its trade relationships and reduce its reliance on China, wich has become its biggest trading partner, in large part due to investments from China’s Belt and Road initiative.
“At a time when trade and dependencies are being weaponized and the dangerous, transactional nature of the reality we live in becomes increasingly stark, this historic trade deal is further proof that Europe charts its own course and stands as a reliable partner,” von der Leyen said.
However, the European Commission estimates that the EU-Mercosur deal will add only 0.05 percent (around $90.2 billion) to the bloc’s economy by 2040. this is becuase trade between europe and Mercosur’s five full members-Argentina, Brazil, Bolivia, Paraguay, and Uruguay-is historically low, even with Brazil (Latin America’s largest economy) being part of the deal.
The accord’s impending signing also threatens to exacerbate political unrest in europe. In recent weeks, farmers and environmental activists have escalated their protests against the agreement, citing concerns that it fails to safeguard European interests.Agriculture workers claim that the deal will flood the EU with cheap food imports, specifically beef and poultry; raise prices; and require excessive local regulation. Meanwhile, environmental groups and other critics argue that south American producers do not meet European standards on animal treatment, deforestation, pesticides, and workers’ rights.
austria, France, hungary, Ireland, and Poland voted against the deal on friday, and Belgium abstained. However, last-minute concessions, including early access to roughly $52 billion in agricultural aid, convinced Italy-a major holdout-to flip its position, allowing the accord to pass.
The European Parliament still needs to approve the treaty for implementation. In the meantime, farmers across Europe launched new protests on Friday, and France’s far-left and far-right parties have launched or vowed to launch no-confidence motions against President Emmanuel Macron’s government over the deal’s impending signing.
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