A trade deal between the European Union and Japan comes into effect in February and it will create the world’s biggest free trade area. But something bigger is on the cards.
EU Trade Commissioner Cecilia Malmström is setting sights on South America. Her plan is to form an even bigger trading bloc by the end of 2019.
As reported by Deutsche Welle (DW), Germany’s international broadcaster, the Mercosur trade area includes Argentina, Brazil, Paraguay, Uruguay, and Venezuela with the total population of some 260 million people. Venezuela’s membership has been suspended in 2016 due to issues including its human rights record.
If the deal is completed, businesses on both sides of the Atlantic could save billions on tariffs.
The EU and Mercosur representatives have been working on a free trade deal since 2000. Earlier this year, Argentina’s foreign minister Jorge Faurie said the accord might be concluded by September, but the talks have seemingly stalled in recent months.
According to DW, one of the reasons for the delay was the victory of far-right Jair Bolsonaro in Brazil. With Bolsonaro set to take office in January, the outgoing government was unable to make clear commitments on trade, said EU’s Cecilia Malmström told DPA on December 29.
However, there are no indications that Bolsonaro’s government would disrupt the talks, Malmström added.
“The new foreign minister told us that they would be happy to achieve the deal and that they would gladly continue talks,” she said.
While the EU hopes to prepare a deal by the end of 2019, Brussels remains insistent on several issues, including its system to protect food names – such as naming only a special kind of cheese produced in Greece “feta” or allowing only the beverages made in the French town of Cognac to bear the same name. In the past, Brussels has also fretted about the incoming influx of South American beef.
In turn, the South American partners are worried about liberalising their car industry, reported DW.