Mercosur and EU agreement would create trade alliance against China and US

The trade agreement between Mercosur and the European Union, under discussion for over 20 years, is still full of impasses. While the countries of the European bloc create barriers, the South Americans are looking for ways to unlock the seal of the agreement. In a bilateral meeting with the French president, Emmanuel Macron, this Friday (23), Luiz Inácio Lula da Silva (PT) dealt with the theme that predicts a series of positive factors for both blocs.

But, in addition to expanding commercial possibilities between the two blocs, specialists consulted by the People’s Gazette explain how the alliance would make them politically strong, especially in a context where the world is polarized. “We can say that the world is divided into four blocs: the United States, the European Union, China and Mercosur. Today, each one walks alone, but if two of them come together, this bloc is strengthened. If this agreement comes out, these blocs will fight against China and the USA”, explains José Augusto de Castro, president of the Brazilian Foreign Trade Association (AEB).

The expert points out that Brazil and the United States are among the largest producers of commitys of the world. If the European Union were to join Mercosur, it would stop buying from the US and would start to prioritize its partner. In addition to strengthening the alliance between the two blocs, the negotiations could be more advantageous than buying from the US giant, as provided for in the agreement.

The alliance would give a new scenario to global trade. According to information from the defunct Brazilian Ministry of Economy, negotiations between the two blocs could reach a market of approximately 800 million people – the largest in the world. In addition, in 2019, the Gross Domestic Product (GDP) of the two blocs represented 25% of the world’s GDP, around US$ 20 trillion.

“Furthermore, in relation to China, although it is still economically isolated in the world, it would start to face two large blocs together. This alliance would make China start to reassess the way it sees Mercosur and the EU, as it would to depend more on these two blocks”, he opines. Deep down, as the president of the AEB assesses, this alliance would also be politically important, as it would send the message that the two blocs, united, would strengthen themselves in the face of world trade.