Mercosur and European Union since 1990: Sisyphus’s negotiations
In Greek mythology, Sisyphus punishment was to eternally roll a boulder up a steep hill. It seems Hades has also punished Mercosur and European Union to an endless circle of negotiations that begin and start at the same point: agricultural goods. This blog post looks at the convoluted history of this trade agreement in the making.
Mercosur and European Union since 1990: Sisyphus’s negotiations
The Association Agreement negotiations formally started in 2000. Twenty-one years later, the Parties have still not managed to sign its final text, despite having reached a consensus on the commitments in the commercial pillar on June 2019. Trade in agricultural goods, environmental protection and sustainable trade are currently the three main points of dissent. In the 1990s, when the two organizations began their relation, these were already relevant topics in bi-regional relations and in the legal texts that were being progressively adopted at that decade.
In 1991 (the very year Mercosur was created), they ignited a high-level dialogue, which was responsible for important milestones regarding the adoption of negotiating mandates[i]. The following year, the European Commission and the Council of the Common Market signed an Interinstitutional Cooperation Agreement in order to exchange know-how in the integration realm[ii], with the establishment of a Joint Consultative Committee, whose initial work included topics on customs, technical standards and – of course – agriculture[iii]. If 1992 was a landmark in the rapprochement between the EU and its South American counterpart, 1994 was the year in which the foundations for the future Interregional Framework Cooperation Agreement were laid[iv]. On December 22, a Joint Declaration reaffirmed the interest in a political and economic association and stressed the mutual interest in cooperation in environmental matters, raising concerns about the sensitivity of the liberalization of some products – which included agricultural goods.
In January 1995, the European Commission proposed a draft of the Framework Agreement with Mercosur[v], recommending that the European Council authorize an agreement that encompassed close cooperation in the economic, commercial, industrial, scientific, institutional and cultural domains”[vi]. It was heavily criticized by agricultural lobbies, due to the negative impacts that the free trade zone could have on its producers[vii]. Notwithstanding, the Council adopted the directives for the negotiation later that year[viii] and Mercosur did likewise[ix]. The Interregional Framework Cooperation Agreement was signed in Madrid in December. Alongside, a Joint Declaration on Political Dialogue between the European Union and Mercosur was signed, which presented shared values, such as democracy and human rights and became an important legal basis for its later bilateral relations[x].
The Madrid Agreement was adopted in an international conjuncture in which the negotiation of free trade agreements had become a trend, as was the case of the Free Trade Area of the Americas (FTAA), the Uruguay Round of the GATT and the Marrakech Agreement[xi]. The special interest in interregional trade encouraged the countries to agree to the provisional implementation of the trade cooperation, while the agreement had not yet completed internal legal procedures necessary for its entry into force[xii].
Both sides had great expectations regarding trade increase, which was an important factor, in spite of hindrances met since the beginning, especially the protectionism of some economic sectors[xiii]. It should be noted that, between 1990 and 1996, exports from the EU to Mercosur grew by approximately 250%[xiv], however, some agricultural lobbies in Europe and industry lobbies in Mercosur were not convinced about the agreements’ benefits.
Even though there was a steady deepening of the relation between the two blocs, a problem hindering negotiations was the lack of a clear mandate of the European Commission to negotiate what most interested Mercosur countries: access to the European agricultural market[xv]. Agricultural products were categorized according to their sensitivity and according to countries most vulnerable to the liberalization of their market with Mercosur. The three most sensitive products were wheat, beef and sugar[xvi]. The liberalization of these products would affect European countries differently, which would become an internal problem for the Union, as it would require a broader reform of the Common Agricultural Policy (CAP). The most affected countries would be Ireland and Luxembourg, followed by Germany, Austria, Belgium, France, the United Kingdom and Sweden. The least vulnerable were Spain, Greece, the Netherlands and Portugal[xvii].
Led by the French government, in 1998 there was a media campaign against the creation of a free trade zone. Germany, Austria, Belgium, Luxembourg and Greece echoed the French appeal, also taking a stand against the interregional agreement[xviii]. Despite the opposition of some countries, a very bold proposal for a negotiating mandate was presented[xix].
At the European Union, Latin America and the Caribbean Summit, held in June 1999, the Parties decided that the agreement would be based on three pillars: commercial, political and cooperation[xx]. The first phase of negotiations began in 2000 and lasted until 2004. Concomitantly, the FTAA talks were taking place and both initiatives were facing controversies over the extent of liberalization. After four years, negotiations were put on hold due to the impossibility of reaching an agreement regarding agricultural trade liberalization, once the access offers were considered unsatisfactory[xxi].
An important factor that influenced the negotiations of the agreement on this first phase was the Doha Round of the World Trade Organization. EU had adopted a negotiation strategy that put forward the unwillingness to offer at the bi-regional level more than what was being offered at the multilateral negotiations. Its assessment was that it would be possible to obtain advantages at the multilateral stage offering a CAP reform, with the subsequent reduction of agricultural subsidies and other protectionist measures[xxii].
The second phase of negotiations began in 2010 and was concluded in 2012. Notwithstanding the evolution of the negotiating texts, there was no exchange of offers. Barriers related to agricultural trade remained. One of the aspects that fostered the resumption of negotiations in 2010 was the 2008 global economic and financial crisis which, among other consequences, made access to markets and the attraction of foreign investment an imperative for the recovery of the economy. Another fuel was the freeze of the Doha Round, as the EU was counting on the conclusion of the multilateral negotiations in order to have a benchmark for its offer concerning the Association Agreement with Mercosur[xxiii].
The third phase of negotiations began in May 2016 and lasted until June 2019, when the Parties announced they concludes the negotiations of the trade pillar[xxiv], which has 22 chapters and annexes, including a chapter on Trade and Sustainable Development. This chapter is currently the subject of debate and opposition to the agreement. Among the countries that oppose its adoption as it is are Germany, Austria, Belgium (Wallonia region), France and the Netherlands, some of which had also opposed the creation of a free trade zone between Mercosur and the European Union in 1998. Nonetheless, one cannot delegitimize the arguments brought forward by these countries for demanding an additional side agreement on environment to the texts already negotiated, but one cannot fail to notice this correlation either. If the last three decades of negotiations have taught us anything is that opening Europe’s market to South American goods (and vice versa) is not an easy task, as the main disagreement between the Parties has always been linked to the agricultural sector, whether regarding liberalization of wheat, beef and sugar or the environmental impact of its production.
If Sisyphus had not tried to cheat death, he wouldn’t be cursed to a life of a repeated and pointless effort. Had Mercosur and European Union been less protectionist and more open to each other’s offers, they wouldn’t have been caught up in this never-ending circle of negotiations. One can only hope they may learn from the past and not keep repeating over and over this endless task.
Elisa de Sousa Ribeiro Pinchemel is a Visiting Research Fellow at Institut Barcelona d'Estudis Internacionals, IBEI (2022). Researcher at Mercosur Research Group from UniCEUB (since 2008). Researcher at Geo$mundo - World Economic Geography from Universidade Tecnológica Federal do Paraná (since 2016). Researcher at Study Group on Law and International Affairs From Universidade Federal do Ceará (since 2021)
[i] ARAÚJO, Ricardo Guerra de. 2018. O jogo estratégico nas negociações Mercosul-União Europeia. Brasília: Funag. p. 164.
[ii] ALMEIDA, Paulo Roberto. 2009. Effects of EU activities and cooperation with Mercosur on regional democracy Building. Stockholm: International Institute for Democracy and Electoral Assistance (IDEA). p. 5. SARAIVA, Miriam Gomes; GAVIÃO, Leandro. 2020. Relações comerciais União Europeia-Mercosul: um breve histórico. In: THEMOTEO, Reinaldo J. (coord.) O novo acordo Mercosul-União Europeia em perspectiva. Rio de Janeiro: Konrad Adenauer Stiftung. p. 92.
[iii] ALMEIDA, Paulo Roberto. 1992. Mercosul-CEE: Acordo de Cooperação. Correio Braziliense. Brasília: 7/07/1992, p. 4. ARAÚJO, Ricardo Guerra de. Op. Cit., p. 164.
[iv] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 165.
[v] SAVINI, Marcos. 2001. As negociações comerciais entre Mercosul e União Européia. Rev. Bras. Polít. Int. 44 (2): 109-125. p.112.
[vi] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 167.
[vii] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 167.
[viii] CIENFUEGOS MATEO, Manuel. 2006. La asociación estratégica entre la Unión Europea y el Mercosur, en la encrucijada. Documentos CIDOB, Número 15. Barcelona: Fundación CIDOB.
[ix] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 168. MERCOSUL. Decisão CMC nº 05/95. Negociações com a União Européia. Assunção, 5 de agosto de 1995. CIENFUEGOS MATEO, Manuel Op. Cit,, p. 43.
[x] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 172.
[xi] GHIOTTO, Luciana; ECHAIDE, Javier. 2020. El acuerdo entre Mercosur y la Unión Europea: Estudio integral de sus cláusulas y efectos. s. Ed. CLACSO Fundación Rosa Luxemburgo Greens/EFA.p. 20.
[xii] SARAIVA, Miriam Gomes; GAVIÃO, Leandro. Op. Cit., p. 95.
[xiii] SARAIVA, Miriam Gomes; GAVIÃO, Leandro. Op. Cit., p. 95.
[xiv] SARAIVA, Miriam Gomes; GAVIÃO, Leandro. Op. Cit., p. 92.
[xv] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 174.
[xvi] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 174.
[xvii] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 174.
[xviii] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 176-177.
[xix] ARAÚJO, Ricardo Guerra de. Op. Cit., p. 177. COMISSÃO EUROPEIA. UE-MERCOSUL e UE-CHILE: A Comissão propõe a passagem à associação inter-regional. IP/98/677. 22 de julho de 1998.
[xx] BRASIL. Resumo Informativo Elaborado pelo Governo Brasileiro. 04 de julho de 2019.
[xxi] BRASIL. Op. Cit., p. 17. PARLAMENTO EUROPEU. BRIEFING. Acordos internacionais em curso. Pilar comercial do Acordo de Associação UE-Mercosul. Serviço de Estudos do Parlamento Europeu. PE 640.138. Agosto de 2019. p. 8. GHIOTTO, Luciana; ECHAIDE, Javier. Op. Cit., p. 21.
[xxii] SARAIVA, Miriam Gomes; GAVIÃO, Leandro. Op. Cit., p. 97-98. ARAÚJO, Ricardo Guerra de. Op. Cit., p. 174. MADURO, Lucia Baptista. O acordo de livre comércio Mercosul-UE: um balanço na perspectiva do bloco sul-americano. In: THEMOTEO, Reinaldo J. (coord.) Op. Cit., p. 126.
[xxiii] MAKUC, Adrián; DUHALDE, Gabriela; ROZEMBERG, Ricardo. 2015. La Negociación MERCOSUR-Unión Europea a Veinte Años del Acuerdo Marco de Cooperación: ¿Quo Vadis? Nota técnica del BID nº 841. Washington: BID. p. 21
[xxiv]LUCIANO, Bruno Theodoro. Os desafios do comércio global e suas repercussões no acordo Mercosul-União Europeia. In: THEMOTEO, Reinaldo J. (coord.) Op. Cit., p. 84.