Argentina and Brazil are seeking financial aid of 12.5 billion euros from the European Union (EU) in their trade agreement negotiations with the South American Mercosur bloc, according to a document seen by Reuters. The request, backed by Brazil, aims to secure funds for grants, loans, and other financial instruments to compensate for increased competition resulting from the trade agreement. However, Uruguay and Paraguay have not supported the push to exclude more forms of government procurement from European competition, as it could potentially delay or derail the deal. The agreement has been on hold since 2019 due to European concerns over Amazon deforestation.
Although the requested financial aid has been met with skepticism, negotiations have recently accelerated with the help of videoconferences, and chief negotiators are set to hold face-to-face meetings in Brussels and Brasilia in the coming weeks. However, the financial aid request, along with the potential reopening of the public procurement chapter, may hinder the conclusion of a final deal this year. A Mercosur ambassador in Brasilia stated that if an agreement is not reached by December, it is unlikely to materialize.
Despite the challenges, Spain’s deputy trade minister, Xiana Mendez, remains optimistic and believes that an agreement can still be reached by December. She emphasized that while there is no intention to reopen the Mercosur treaty, additional issues need to be discussed by the Mercosur countries. The EU has been cautious about entering into a trade agreement with Mercosur due to concerns over environmental safeguards, particularly surrounding Amazon deforestation.
