\t\t\t\t\t \t\t\t\t\t \t\t\t\t\t The free trade agreement between the European Union (EU) and Mercosur is one of the largest and most ambitious in the world, according to diplomats from the EU, Spain and Catalonia. But for it to be fully implemented, the economies of both blocs will have to adapt to competition and new trade rules.<\/p>\n
Although its signing after more than 20 years of negotiations marks a historic milestone and promises a sharp rise in Argentine exports and investment over the coming decades, that outcome can\u2019t be reached without some \u201csacrifices.\u201d<\/p>\n
The warning came from Spain\u2019s ambassador to Argentina, Joaqun Mara de Arstegui Laborde, at the Catalonia-Southern Cone Economic Forum held at the Argentine Chamber of Commerce.<\/p>\n
Arstegui warned that \u201cnothing is magic or free it\u2019s going to demand sacrifice.\u201d He stressed that the free trade agreement \u201cis a bet on shared prosperity\u201d between the two blocs, but that it will inevitably require \u201clegal and commercial changes,\u201d among other adjustments.<\/p>\n
\u201cDo you really think that when Spain joined the EU it didn\u2019t sacrifice anything?\u201d, the Spanish diplomat said, noting that since joining the European bloc, the Spanish economy is now the one that \u201chas contributed the most growth and the most jobs\u201d to the EU in recent years.<\/p>\n
Along similar lines, the Catalan government\u2019s delegate for the Southern Cone, Josep Vives i Portell, recalled that in the run-up to Spain\u2019s entry into the EU \u201cthere was a lot of skepticism,\u201d but pointed to its positive impact, especially in major Spanish cities like Madrid, Barcelona and Bilbao.<\/p>\n
\u201cThis is going to be very complicated, but it\u2019s going to be exciting,\u201d Vives said, adding that \u201cwhen we look at this thicket of regulations\u201d a reference to the 4,000 pages that make up the agreement \u201cwe shouldn\u2019t be scared; on the contrary, it should spur us on.\u201d<\/p>\n
The impact on the Argentine industry At another point in his remarks, Arstegui acknowledged that \u201cwe\u2019ll have to see what impact it has on the province\u2019s industry\u201d referring to Buenos Aires Province.<\/p>\n
He added that \u201cthe success of this agreement will depend on ordinary citizens noticing it, not just honey producers,\u201d a reference to the first shipment of Argentine honey under the agreement.<\/p>\n
Buenos Aires Province is Argentina\u2019s industrial heartland 50% of its manufacturing is produced there and also the region hit hardest by trade liberalization and falling consumption under Javier Milei\u2019s government.<\/p>\n
Eric Hoeg, the EU\u2019s ambassador to Argentina, said the two blocs\u2019 economies are complementary, noting that together they create \u201cthe largest free trade area in the world, with 700 million people, accounting for 35% of global trade.\u201d<\/p>\n
\u201cThe EU has a competitive edge in machinery, vehicles, pharmaceuticals and chemicals. Mercosur exports food, energy, raw materials and certain industrial goods, and it also has a lot of potential in services,\u201d he said.<\/p>\n
According to Hoeg, \u201cthe province plays a fundamental role\u201d in the future, since \u201ccompanies are going to have new opportunities\u201d thanks to the opening of a high-purchasing-power market with tariff predictability.<\/p>\n
\u201cFor small and medium-sized companies in Mendoza, Crdoba, Santa Cruz or Greater Buenos Aires, that means being able to plan an export,\u201d he said. He added that this predictability \u201cis perhaps the most valuable asset of the agreement, and the one that determines investment 10, 20, 30 years out.\u201d<\/p>\n
Winners, losers and reinvention Mining stood out as one of the most talked-about sectors among the speakers. Hoeg, for instance, said \u201cthe European energy transition needs lithium and copper,\u201d of which Argentina \u201chas world-class reserves.\u201d<\/p>\n
\u201cThe European investor isn\u2019t looking to extract and leave, but to join the local value chain, transfer technology and respect the highest environmental standards,\u201d he added.<\/p>\n
Jos Antonio Ardavn, head of the Latin America and Caribbean Division at the OECD, reached a similar conclusion.<\/p>\n
\u201cLatin America and the Caribbean holds a strategic position in this global supply of critical materials: the region accounts for 40% of lithium reserves and 32% of copper reserves,\u201d he said.<\/p>\n
Not every sector of the economy shares the same fate, however. Romain Zivy, director of the office of the Economic Commission for Latin America and the Caribbean (ECLAC) in Argentina, explained that alongside mining, the energy and agribusiness sectors would be the big winners in Mercosur.<\/p>\n
On the other side would be manufacturing, along with dairy and wine production the latter two hurt by the trade barriers the EU imposed to protect its own output.<\/p>\n
\u201cThe agreement is an opportunity for the bloc to narrow competitiveness gaps, not just in production,\u201d Zivy said, stressing the need to \u201cfoster the development of local suppliers built on the activities with comparative advantages that benefit from the agreement.\u201d<\/p>\n
In the same vein, Ardavn noted that the region has experience exporting commodities, \u201cbut the challenge is much more than exporting.\u201d<\/p>\n
\u201cIt means looking at how we can move forward to turn that mineral wealth into productive capacity, innovation and even processing and sustainable industrial development,\u201d he said.<\/p>\n
The automotive industry Zivy, from ECLAC, stressed that trade among Mercosur members has fallen from 28% in the 1990s to 12% today.<\/p>\n
\u201cIt runs counter to the trends in other blocs around the world, and it strikes us as a warning sign,\u201d he cautioned.<\/p>\n
On that point, he noted that 25% of intra-bloc trade is in the automotive sector, considered \u201cthe main driver of integration\u201d in the region. But it now \u201cfaces the challenge of the growing demand for Chinese electric cars.\u201d<\/p>\n
Ardavn added that \u201cMercosur and Argentina and Brazil in particular has a very solid auto industry, with a tradition of exporting.\u201d<\/p>\n
For that reason, he raised the possibility \u201cthat the industry could be retooled to focus on this type of [electric] vehicle,\u201d while also drawing on the region\u2019s critical-mineral deposits.<\/p>\n
\u201cGiven the circumstances we\u2019re living in, with the geopolitics we\u2019re experiencing, integration and the building of value chains in the region become essential,\u201d he concluded.<\/p>\n","protected":false},"excerpt":{"rendered":"
The free trade agreement between the European Union (EU) and Mercosur is one of the largest and most ambitious in the world, according to diplomats from the EU, Spain and Catalonia. But for it to be fully implemented, the economies of both blocs will have to adapt to competition and new trade rules. Although its […]<\/p>\n","protected":false},"author":261,"featured_media":84987,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[414,42,2764],"tags":[595,96,7329],"class_list":["post-84986","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","category-economics","category-mercosur","tag-business","tag-economics","tag-mercosur"],"_links":{"self":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/84986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/users\/261"}],"replies":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/comments?post=84986"}],"version-history":[{"count":0,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/84986\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media\/84987"}],"wp:attachment":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media?parent=84986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/categories?post=84986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/tags?post=84986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}