CA脩UELAS, Argentina (AP) 鈥� Talks on a between the European Union and four South American countries started so long ago that the euro wasn鈥檛 even in circulation, China hadn鈥檛 yet joined the World Trade Organization and Venezuela was still America鈥檚 top oil provider.
But against a starkly different geopolitical background and tough odds 鈥� including 鈥� the EU and the South American alliance known as are expected to formally sign their trade pact this Saturday at a ceremony in Paraguay.
This is the first major trade agreement for Mercosur, which includes the region’s two biggest economies, Brazil and Argentina, along with Paraguay and Uruguay. Bolivia, the newest member, was not involved in negotiations but can join the agreement in the coming years.
The 鈥� lifting tariffs on products ranging from Argentine steaks and Brazilian copper to German cars and Italian wine 鈥� still has to be ratified by the .
The significance of creating one of the world’s largest free-trade zones 鈥� home to more than 700 million people and accounting for a quarter of global gross domestic product 鈥� while yanks the United States is not lost on the signatories.
For once, it’s not about Trump vs. China
European Commission President hailed the deal last week as a powerful endorsement of multilateralism “in the face of an increasingly hostile and transactional world.” Brazilian President , 80, called it a rare 鈥渧ictory for dialogue, negotiation and the bet on cooperation.鈥�
That victory comes at the expense of the U.S. and China, experts say, as Trump aggressively in the resource-rich region and and to build influence.
鈥淚t鈥檚 a signal that South American economies are seeking to hedge away from this great power competition between the U.S. and China,鈥� said Lee Schlenker, a research associate with the Global South program at the Quincy Institute for Responsible Statecraft, a Washington think tank.
鈥淚t shows that South America can continue to flex its muscles in the international sphere, to diversify its trade partners and exert a certain level of autonomy it鈥檚 often denied.鈥�
South American ranchers rejoice
The accord grants South American nations, renowned for their fertile land and skilled farmers, increased access at a preferential tax rate to Europe鈥檚 vast market for agricultural goods.
Here in Argentina, exporters reckon they鈥檒l save tens of millions of dollars a year thanks to the deal鈥檚 immediate elimination of a 20% tariff on the EU鈥檚 long-standing quota scheme for high-quality meat imports.
It鈥檚 a breakthrough for Argentina, a nation dominated for decades by governments that kept the economy to the outside world and prioritized the domestic market to the extent of imposing taxes on farm exports to keep food prices down.
鈥淲e’re in the midst of a paradigm shift here,” said Carlos Colombo, the president of Ca帽uelas Cattle Market in Buenos Aires province where over 12,000 cattle are sold daily, many destined for Europe and China. 鈥淎rgentina has reopened itself to the world.”
Argentine President Javier Milei may be Trump鈥檚 strongest in Latin America 鈥� sharing his and the 鈥� but no one can call the radical libertarian a .
At first the notoriously slow-moving Mercosur as irrelevant and threatened to ditch it. But he changed his tune since realizing the bloc鈥檚 potential to sweep away tariffs and slash customs red tape.
鈥淗e sees this agreement as a way to revitalize and re-signify Mercosur,鈥� said Marcelo Elizondo, an Argentine economic analyst specializing in international trade.
The free-trade fever has also infected Brazil’s long-closed economy. Apex, a Brazilian government investment agency, estimates that EU-bound agricultural exports like instant coffee, poultry and orange juice will rake in $7 billion in coming years.
Europe’s farmer lobby wins concessions
Squeezed by environmental regulations and fearing a flood of cheap food products from across the Atlantic, farmers have and of European capitals in an explosion of outrage against the agreement.
The EU has scrambled to soothe their concerns over decades of negotiations, adding environmental and animal welfare and imposing strict quotas for South American exports of meat and sugar to ensure homegrown produce stays competitive.
Even so, the angry farmers , Poland and a few other states to oppose the deal in last week’s internal EU vote, depriving the accord’s supporters of what they hoped would be a show of unity. Italy and other agricultural powerhouses only after the EU offered farmers generous subsidies to the tune of $52 billion.
鈥淚t’s a sizable bribe,鈥� said Jacob Funk Kirkegaard, nonresident senior fellow at the Peterson Institute for International Economics. 鈥淓U leaders decided that the deal is so important at this moment, it’s worth it.鈥�
‘Cows for cars’
Some have dubbed the deal 鈥渃ows for cars,” reflecting the perception that Europe’s auto industry will also win big.
Clobbered by with China and sky-high , vaunted German auto giants like Volkswagen and BMW are glad for the boost, as are producers in Europe’s pharmaceutical, construction and machinery sectors gaining access to hundreds of millions more consumers.
Experts say that the elimination of 35% tariffs on auto parts and cars gives European industrial exporters a rare chance to claw back their South American market share from cheaper Chinese rivals.
鈥淔ailing to sign the EU-Mercosur free trade agreement risked pushing Latin American economies closer to Beijing鈥檚 orbit,鈥� said Agathe Demarais, a senior policy fellow with the European Council on Foreign Relations.
But many are still are holding their breath, having watched negotiations lumber along for years only to trip up at the last minute.
鈥淭here are still several steps that have to be taken … and Europe continues to be very careful,” Colombo said, straining to be heard over the hollers of cowboys prodding hundreds of bellowing cattle into trucks.
鈥淟et’s not forget, this is historic. We’ve never reached an agreement like this before.”
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Associated Press writer Mauricio Savarese in Sao Paulo contributed to this report.
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