The EU and Mercosur want to move forward: this affects Switzerland Prices for new and used cars remain high – the supply of used electric cars is growing

In the battle between China and the US for world domination, the European Union is in danger of falling between chair and bench. It is therefore increasingly seeking contact with other regions: for the first time in eight years, a summit meeting with the Community of Latin American and Caribbean States (CELAC) was held in Brussels.

The meeting of the more than 50 heads of state and government was not without conflict. For example, the war in Ukraine caused controversy. Cuba, Nicaragua and Venezuela have all resisted condemning Russian aggression. The EU’s free trade agreement with the Mercosur states of Argentina, Brazil, Paraguay and Uruguay also remains controversial.

Why is?

Last but not least, Europe’s loss of importance is reflected in the economy. China has become Mercosur’s most important trading partner in recent years. The EU wants to catch up with the free trade agreement. She hopes for tariff reductions and better export opportunities for her companies in the growth markets.

Conversely, the South Americans supply important raw materials such as nickel, cobalt and lithium for the energy transition and the European ‘Green Deal’. The agreement was in principle negotiated in 2019, but has been “on hold” since then. The negotiations should gain momentum again with the summit in Brussels, according to the European Commission.

Where’s the problem?

There are a few reasons for the delay. This includes the corona pandemic, and the term of office of Brazilian president and ‘rainforest peddler’ Jair Bolsonaro also stood in the way of an agreement. His successor, Luiz Inácio Lula da Silva, said on Monday Brazil would stop logging the Amazon rainforest by 2030.

Yet European environmental groups remain skeptical about the Mercosur deal, and farmers are also resisting. Because the South Americans are agricultural exporters and want to benefit from the agreement in this area, for example with beef and soybeans. European farmers fear that this will lead to relentless price pressure.

EU countries such as France and Austria have so far refused to ratify the treaty. Its supporters emphasize that failure is not useful to anyone. “We are not saving an inch of rainforest by not ratifying the trade deal,” said German-Brazilian political scientist Oliver Stuenkel on ARD Deutschlandfunk.

What is possible?

A breakthrough at the EU CELAC summit was not to be expected from the outset, especially since President Lula da Silva also called for more protection for Brazilian SMEs, for example in public tenders. He recently opposed additional environmental regulations, but Lula was optimistic that an agreement could be reached by the end of 2023.

Spanish Prime Minister Pedro Sanchez also expressed quiet confidence that a positive conclusion could be reached during his country’s current EU presidency. Austrian Chancellor Karl Nehammer, on the other hand, said in Brussels that nothing had changed in his country’s position on the agreement.

And Switzerland?

Shortly afterwards, Switzerland, together with the three other EFTA states Norway, Iceland and Liechtenstein, was able to announce a fundamental agreement with Mercosur in 2019. But even in this case, a quick signature was not forthcoming. In addition to Corona, the blockade of the EU agreement was responsible for this.

In the case of Switzerland, there is another obstacle. A referendum would very likely be held against a Mercosur deal. An EFTA agreement with Indonesia fell away by a hair’s breadth during the vote in March 2021, although the Federal Council managed to ensure that Switzerland only needs to import sustainably produced palm oil.

Similar concessions from the important Mercosur group are practically impossible, the State Secretariat of Economic Affairs (SECO) indirectly admits on its website. This programmed resistance from environmental and development organizations, and even the farmers who had agreed to the Indonesian treaty were able to resist it.

Critical statements about Mercosur have repeatedly come from the ranks of the farmers’ organisation. He demonstratively boycotted a “Mercosur Agricultural Summit” held in early 2018 by the then Minister of Economic Affairs Johann Schneider-Ammann (FDP). However, winning a voice against farmer and environmental opposition is difficult.

(With material from Keystone-SDA)