South America Can Still Save Its Trading Bloc
Stalemate over a trade deal with the European Union has left Mercosur on life support. Its revival depends on spurring greater intraregional trade.
How to cure the Mercosur headache?
Photographer: Buda Mendes/Getty Images South AmericaThe Mercosur-European Union trade agreement is back in the deep freeze, its ratification iced by the insistence of France’s President Emmanuel Macron on more muscular enforcement of environmental standards in Brazil and last-minute reservations raised by Argentina’s outgoing President Alberto Fernandez about its impact on domestic industries. This setback puts more at stake than an uptick in tariff-free South American beef and vegetables in European supermarkets and more affordable European cars and clothing on the streets of Sao Paulo and Buenos Aires. The failure may well end the 32-year-old South American customs union itself, leaving the region out in the cold as the world divides up into regional trading blocs.
Mercosur began in 1991, as a series of nuclear and other diplomatic accords between once estranged South American nations blossomed into a commercial agreement. Brazil, Argentina, Uruguay and Paraguay formed a customs union with aspirations for a common market not unlike the one then emerging in parallel across the Atlantic in Maastricht, Netherlands.