By abandoning the EU-Mercosur deal, both continents missed a historic opportunity to adapt to a more unstable world.
By Oliver Stuenkel
Nearly a quarter of a century ago, in June 1999, heads of state and government from the European Union gathered with their Latin American and Caribbean counterparts in Rio de Janeiro for their first interregional summit. To great fanfare, the delegates established a strategic partnership. They also began negotiations on a trade agreement between the EU and Mercosur, the South American customs union of Brazil, Argentina, Paraguay, and Uruguay. A World Trade Organization (WTO) report published a year later confidently predicted that talks would be concluded by 2005.
Yet the summit did not lead to closer ties between the two regions. Although EU companies make up the biggest share of foreign investment in Mercosur countries, an EU-Mercosur deal was never ratified and the EU’s influence in Mercosur countries has declined significantly over the past two and a half decades—particularly when compared to that of China and the United States.
Take Brazil, Latin America’s largest economy. While trade between Brazil and the EU grew in absolute numbers over the years, the EU’s share of Brazil’s overall trading portfolio became smaller. In 2000, the EU still absorbed 28 percent of Brazilian exports, a number that fell to 24 percent in 2007 and 16 percent in 2019. Similarly, Brazil’s share of the EU’s overall trade sunk from nearly 2 percent of EU imports and exports in 2000 to 1.6 percent by 2021.
China, by comparison, was an insignificant trade partner of Brazil’s at the turn of the century. Yet today, roughly 30 percent of Brazil’s exports go to China—more than to the EU and the United States combined. China’s influence in South America has expanded in other ways, too. Brazil in 2009 became a founding member of the Beijing-led BRIC grouping (called BRICS since South Africa’s accession a year later), while Argentina joined China’s Belt and Road Initiative in 2022. (Though Brazil’s total exports to the United States also declined significantly—from….
