Between „strategic autonomy” and „turning point”: The importance of trade between the EU and Mercosur

In view of geopolitical changes and growing protectionist tendencies of large economies such as China and the USA, closer co-operation with the Global South, including the Mercosur countries, is considered necessary. Germany and France have adapted their economic policies accordingly, in particular by actively promoting a European industrial strategy and a derisking strategy to reduce economic vulnerabilities. These strategies should enable a strengthening of the EU’s economic resilience, reduce risks through the diversification of trade partners and promote partnerships with third countries at eye-level. These developments could further the convergence of two traditionally different views of trade policy between France and Germany.

The EU-Mercosur agreement offers the EU the opportunity to deepen its economic relations with South America and reduce dependencies on other global trading powers. This could be achieved by opening up European markets for South American agricultural commodities and the export of European industrial goods. The aim is to promote bilateral trade and investment and reduce trade barriers, also in order to position itself as a serious alternative trading partner to China.

The policy paper concludes that the EU-Mercosur agreement could be an essential building block for the EU's economic security in a fragmented world, provided that the different national interests within the EU, among others between France and Germany, are harmonised and a clear strategy is developed to overcome geopolitical challenges.