Mercosur meets in Puerto Iguazú with a mission to unblock agreement with the EU
Mercosur meets this Monday in Puerto Iguazú with the aim of unblocking the trade agreement with the European Union (EU) at a summit that will mark the farewell of Alberto Fernández and Mario Abdo Benítez and the return to the bloc of Luiz Inácio Lula da Silva.
The Argentine leader, who will not stand for re-election and will leave power in December, will hand over the baton of the pro tempore presidency of the economic bloc to the Brazilian leader, who will return to a meeting of the Southern Common Market after 13 years of absence.
For his part, the Paraguayan leader will take his leave before handing over the presidency of his country to Santiago Peña, who will take over on 15 August.
On Monday, the Common Market Council (CMC) will meet, comprising the foreign and economic ministers of Argentina, Brazil, Uruguay and Paraguay, and in the afternoon the presidents of the Mercosur central banks and the associated state of Bolivia will join the meeting.
On Tuesday, the heads of state will meet to round off a summit to be held in a hotel in the Iguazú National Park, which is home to the famous Iguazú Falls, a World Heritage Site.
The return of Lula, who aims to promote South American integration, opens up a new opportunity to revitalise a divided Mercosur with several internal fronts - Brazil and Argentina's asymmetries with Paraguay and Uruguay are still enormous - and external fronts, with various trade agreements under negotiation.
The EU and the environmental protocol
The main challenge is to close the negotiations with the EU once and for all.
In 2019, the parties reached a general agreement with a number of technical aspects still to be ironed out, but since then problems on both sides of the Atlantic have been mounting.
The proposed environmental annex attached by the EU a posteriori has not been well received by Mercosur's partners, according to the EU bloc's high representative for foreign affairs, Josep Borrell.
Even Lula himself, on a recent trip to France, described the new letter of green commitments as 'unacceptable' and 'threatening'.
The EU is now awaiting a response from Mercosur, which is expected to be agreed in Puerto Iguazú, although Brazilian diplomacy has lowered its expectations since, according to the Foreign Ministry, it has not yet finished evaluating the details of the texts.
"It is not such a fast process because the agreements are very delicate", although "we are very close" to taking our considerations to Mercosur to put them together and thus draw up a counter-proposal, said Ambassador Mauricio Carvalho, director of Economic Affairs at the Brazilian Foreign Ministry.
Moreover, in the second half of the year Brazil and Spain, both great enthusiasts of the trade agreement, will coincide at the head of both blocs, which may help to unblock the dialogue.
Other ongoing negotiations
Beyond the agreement with the EU, Brazil, Latin America's greatest power, wants to push forward Mercosur's external agenda "ambitiously" and obtain "concrete results" during the six months of the rotating presidency.
In this respect, Carvalho said that they also intend to tackle other trade agreements whose discussions are at an advanced stage, such as those with the EFTA group (Iceland, Norway, Liechtenstein and Switzerland) and with Singapore.
In addition, they also intend to develop the "not so advanced" dialogue with other countries, such as Canada, Indonesia and Vietnam.
Venezuela on the table?
Another issue that has hovered over Mercosur summits in recent years is the situation of Venezuela, suspended from the bloc since 2017.
Lula's Brazil has resumed relations with the government of Nicolás Maduro after four years of silence with the Jair Bolsonaro administration (2019-2022) and wants the Caribbean country back in the bloc.
"We would like to see Venezuela reintegrated into Mercosur," but there are no plans to discuss it at this summit, said the Brazilian foreign ministry's secretary for Latin America and the Caribbean, Gisela Padovan.
However, "it is an issue that is on the agenda" of the government and Lula wants to discuss it with the other three partners at some point.
Argentina has already declared that it is also in favour, although its position could change radically depending on the presidential elections in October; while Uruguay and Paraguay are less inclined to a return with the potential to generate more fractures within the South American group.