The points that marked the Mercosur summit – 07/04/2023 – Market

During the 62nd Mercosur Summit in Puerto Iguazú, Argentina, the presidents of the member countries —Brazil, Uruguay, Paraguay, Argentina— and Bolivia, an associated state, discussed expectations and needs for the future of the bloc.

President Luiz Inacio Lula da Silva was sworn in at the meeting as temporary leader of the bloc, a post he will assume until the end of 2023. Among his priorities in the post are accelerating Bolivia’s official accession to the bloc, including the automotive and sugar sectors in the free trade between countries and expand the adoption of a common currency for commercial transactions between neighbors.

During the leaders’ speeches, issues of common interest were mentioned, such as the expansion of trade agreements, the use of a common currency for imports and exports, and environmental protection in South American territories.

More challenging themes were also highlighted, such as the trade agreement with the European Union, the possible reinsertion of Venezuela, suspended from the bloc in 2016, and Uruguay’s complaints, which threaten the country’s permanence in Mercosur.

Below, we list the details of these challenges for the South American bloc:

1. Agreement with the European Union

In his opening speech, host Alberto Fernández criticized what he considers protectionist practices in the agreement with the EU.

The European Union’s letter provides for sanctions if countries fail to comply with environmental requirements, which include a ban on food grown with pesticides widely used in Brazil, but banned in Europe, and the entry of wood that does not come from sustainable chains.

“The presentation of new environmental demands by the European Union presents us with a partial vision of sustainable development. A vision that is excessively centered on the environment, without registering the three dimensions of sustainability (environmental, economic and social) and their interaction with each other”, said the president of Argentina.

Afterwards, President Luiz Inácio Lula da Silva took a similar position, adding details about his vision in relation to the agreement.

“The Additional Instrument presented by the European Union in March this year is unacceptable. Strategic partners do not negotiate based on distrust and the threat of sanctions. It is imperative that Mercosur presents a quick and forceful response.”

The Brazilian government also defends the maintenance of the right to prioritize national products in government purchases, “one of the few instruments of industrial policy that we have left”, according to Lula.

“If we give up Brazilian companies to buy from foreign companies, we will simply kill small and medium-sized Brazilian companies, small and medium-sized entrepreneurs, and reduce jobs in Brazil”, declared Lula live on his Youtube channel a few hours before the summit.

The Brazilian president briefly mentioned the possibility of a meeting between ministers from the bloc’s countries to solve, at a technical level, the issues that still block the agreement.

The president hopes that the subject will be taken up again at the meeting of CELAC (Community of Latin American and Caribbean States) with the European Union, in a summit that will take place in Brussels, capital of Belgium, between the 17th and 18th of July.

2. Complaints from Uruguay

At the start of the Mercosur summit last Monday (7/3), the Uruguayan Foreign Minister, Francisco Bustillo, surprised by stating that his country may reconsider its membership of the bloc.

“Either to modify the founding treaty itself, or eventually consider the possibility of leaving Mercosur as a founding State and becoming an associated State”, said the Chancellor after participating in the first day of the meeting held in Puerto Iguazú.

In Mercosur, the associated states have fewer responsibilities and more commercial freedoms, but are left without voting power and full participation in the common market.

On Tuesday, without mentioning the possibility described by the chancellor, the Uruguayan president, Luis Alberto Lacalle Pou, defended the bloc’s flexibility.

He stated that his priority is to advance together with Mercosur in trade agreements, but if that is not possible, his government is considering making bilateral agreements with countries like China.

The Uruguayan government says it will not accept a position of immobility and criticized the lack of progress in treaties with other regions of the world.

“Uruguay struggles to find markets. Our trade balance between partner countries is in deficit,” said Lacalle Pou.

3. Return of Venezuela to the bloc

President Lula had already mentioned, in the past, the possibility of readmitting Venezuela to the bloc. The country was suspended from Mercosur in 2016. At the time, the bloc justified the decision by stating that Venezuela did not meet democratic criteria.

Lacalle Pou, from Uruguay, was the first to mention the subject, taking a stand against the country’s return to the group.

“Mercosur has to give a clear signal for the Venezuelan people to move towards a full democracy that they don’t have today”.

“Everyone here knows what we think about the Venezuelan regime. You have to try to be objective. It is clear that Venezuela will not achieve a healthy democracy if, when the possibility of elections is glimpsed, a candidate like María Corina Machado, with enormous potential, is disqualified for political and not legal reasons.”

According to the agency France Presse, María Corina Machado is the name of the opposition that appears best placed to contest the presidential elections in the country.

Last week, the Venezuelan Comptroller General announced that she will be barred from holding public office for 15 years because of “administrative irregularities”.

Machado contested the decision.

“They are wrong if they think that at this moment, with maneuvers (…), the people of Venezuela will stop or lower their heads. That is over. Here there is a single entity, a single voice that empowers and it is the people of Venezuela” , he said.

Alberto Fernández, president of Argentina, and Lula, defended maintaining an open dialogue with Venezuela.

“Regarding the issue of Venezuela, all the problems we have with democracy, we don’t hide from them, we face them. I don’t know the details of the problem with the candidate (María Corina Machado) from Venezuela, I intend to know”, said Lula.