In ongoing negotiations to finalize a trade agreement between the European Union and South America's Mercosur bloc, Argentina and Brazil have jointly requested €12.5 billion (approximately $13.2 billion) in financial assistance from the European Union, as per a document seen by Reuters. The request aims to secure support to mitigate the potential challenges posed by the trade agreement.
This request, supported by Brazil in its role as the current rotating president of the four-nation Mercosur, is intended to address concerns and facilitate the conclusion of the trade deal. While Argentina and Brazil have advocated for the exclusion of certain government procurement types from European competition, Uruguay and Paraguay have not supported this idea, as it could jeopardize or delay the agreement that has been in the works for two decades.
The document, presented two weeks ago, specifies that the European Union should allocate financial resources totaling no less than €12.5 billion in the form of grants, loans, and other financial instruments. These funds would be aimed at compensating for increased competition and would become available as tariffs begin to decrease, following the schedules outlined in the trade in goods chapter of the agreement.
A spokesperson for Brazil's foreign ministry noted that Mercosur's position is evolving, suggesting that the text seen by Reuters may not be the latest version. He indicated that discussions are ongoing, and changes are being considered and agreed upon.
The negotiations between Mercosur and the European Union have faced challenges and delays, with the agreement being on hold since 2019, primarily due to European concerns regarding Amazon deforestation. The recent request for financial aid was presented as a counterproposal by Mercosur in response to an EU addendum proposing environmental safeguards.
Although talks have accelerated in recent weeks, with videoconferences and upcoming face-to-face meetings in Brussels and Brasilia, the request for financial assistance and the potential reopening of discussions on the public procurement chapter could complicate the timeline for reaching a final agreement this year.
An ambassador from Mercosur in Brasilia emphasized the time sensitivity of the matter, suggesting that if an agreement is not reached by December, it may face significant challenges in the future. However, Spain's deputy trade minister, Xiana Mendez, expressed optimism, stating that while there is no intention to reopen the Mercosur treaty, there are additional issues to be discussed by Mercosur countries, and it remains possible to reach an agreement by December.