Home Economic Indicator Argentina and Brazil request 12.5 billion euros in financial assistance during EU-Mercosur negotiations.

Argentina and Brazil request 12.5 billion euros in financial assistance during EU-Mercosur negotiations.

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Argentina and Brazil Seek Financial Aid in EU-Mercosur Talks

Financial Aid Requested

Argentina and Brazil are seeking financial aid of 12.5 billion euros ($13.2 billion) from the European Union (EU) in their ongoing trade agreement negotiations with the Mercosur bloc in South America. This request is backed by Brazil and has been confirmed by three EU and South American diplomats. The aim is to secure funds to support the objectives of the agreement.

Proposed Changes

In addition to financial aid, Argentina and Brazil are also pushing for the exclusion of certain government procurement from European competition. However, Uruguay and Paraguay have not supported this idea, as it could potentially delay or derail the agreement that has been in the works for two decades.

Evolution of Position

A spokesman for Brazil’s foreign ministry mentioned that Mercosur’s position is evolving, and the document seen by Reuters may not represent the latest version. There are ongoing discussions and agreements being made that may result in changes to the proposed text.

Compensation for Increased Competition

The EU funds, intended to compensate for increased competition, would be made available as tariffs start to drop, based on the schedules outlined in the trade in goods chapter of the agreement.

Negotiations and Potential Challenges

The agreement has been on hold since 2019 due to concerns from the EU regarding Amazon deforestation. However, talks have recently accelerated with video conferences, and chief negotiators are scheduled to meet in person in Brussels and Brasilia. The financial aid request and the reopening of the public procurement chapter could potentially pose challenges to reaching a final deal this year.

Time Sensitivity

A Mercosur ambassador in Brasilia stated that there is a limited timeframe to reach an agreement. If no agreement is reached by December, it is unlikely that the deal will proceed. However, Spain’s deputy trade minister expressed optimism that it is still possible to reach an agreement by December.

Note: The euro to dollar exchange rate is approximately 0.9441 euros to 1 dollar.