Mercosur debates Venezuela, EU, and integration

December 26, 2017

Latin News

On 21 December the Southern Common Market (Mercosur) held a heads of state summit in Brasília during which Paraguay assumed the pro tempore presidency of the trade bloc.

Significance: The Mercosur heads of state gathered in the Brazilian capital devoted considerable time to discussing the tortuous trade negotiations between Mercosur and the European Union (EU), and debated what to do about Venezuela, which was suspended from the bloc indefinitely in August this year. There was also more talk about a convergence between Mercosur and the Pacific Alliance trade bloc.

Paraguay’s President Horacio Cartes said it was high time that Mercosur and the EU put pen to paper “after 21 years of seeking a trade accord”. Cartes said that he would use the rotating presidency of Mercosur to try and finally seal the accord, which he said was now “much closer”, a sentiment shared by his Brazilian peer Michel Temer. Uruguay’s President Tabaré Vázquez was much more circumspect, however, warning that “despite our efforts, the accord has not been struck”, with key issues like meat products and biofuels still outstanding. “The ball is now squarely in the EU’s court,” Vázquez added, urging the EU to show “responsibility” as if it all fell apart now “it would be enormously frustrating”.
As regards Venezuela, the heads of state agreed that the reasons which prompted Mercosur to trigger its democracy clause and suspend the country from the bloc for a rupture of the democratic order still applied. Argentina’s President Mauricio Macri said Mercosur was committed to “the defence of human rights, the release of political prisoners, and the prompt adoption of an electoral calendar guaranteeing a transparent process” in Venezuela.
On the integration front, Chile’s foreign minister, Heraldo Muñoz, urged the attending heads of state to deepen ties between Mercosur and the Pacific Alliance which he said was of “extreme importance”. Chile, an associate member of Mercosur, is a full member of the Pacific Alliance along with Mexico, Peru, and Colombia. President Macri has also espoused the idea of a convergence between the two blocs and will find a firm ally in Chile’s Sebastián Piñera, a fellow businessman with whom he shares an ideological affinity, when he assumes the presidency next March.

Looking Ahead: It is likely that 2018 will end the same way as 2017 with no trade deal between Mercosur and the EU, and Venezuela still be suspended from the bloc. There is a stronger chance of Mercosur and the Pacific Alliance improving ties, although concrete accords will be problematic.

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Latin American Newsletters (LatinNews) was founded in London in 1967 to provide expert political, economic, and security analysis on Latin America and the Caribbean. For nearly 50 years, it has been acknowledged as the foremost authority on the region.

Tags: eu, investment, investors, latam, latin america, mercosur, political risk, venezuela
Posted in LatAm, Macro Economics, Politics Risk, Macro Economics, Politics Risk