President Alberto Fernández inaugurated the Mercosur summit this Tuesday, where he will pass the rotating presidency of the multilateral economical organization made up of Argentina, Brazil, Uruguay and Paraguay to Brazilian President Luiz Inácio “Lula” Da Silva.

In his opening speech, Fernández called on fellow Mercosur country members to work on becoming exporters of manufactured goods instead of just raw materials providers, while also criticizing the European Union (EU)’s objections to sign the free trade agreement with Mercosur that has been on stand-by since 2019.

“Mercosur is a two-fold opportunity for our countries’ companies: as a common market, as well as an opportunity for third parties that see it as an attractive way of extending their own productions,” Fernández said in front of presidents, ministers and government officials from Uruguay, Paraguay, Brazil and other countries that participated in the event.

Fernández stressed the importance of the energy transition and digitalization, two items he considers to be crucial in today’s economy. 

“The leap in terms of development will be colossal if we manage to anchor productive investments in Mercosur that add value to our natural resources,” he said.

“We must integrate ourselves into the world economy not just as raw material providers, but also as manufacturers and exporters. We produce food and energy, and that’s exactly what the world needs right now. We have the required scientific and technological ability to add value to what our land provides. If we seize this opportunity, we’ll stop being just a raw materials link within the productive process,” Fernández stated. 

Referring to the free trade agreement that the European Union is refusing to sign, Fernández said Mercosur countries should reject being only one-dimensional economical actors. “No one can condemn us to only providing the raw materials that others use for products that they then sell back to us at outrageous prices.”

“We intend to access the free market that industrialized nations boast about, bidding on industrial development. I am not in the isolated place some want to see me in. I want to add value to our products in order to be protagonists of the future. Otherwise, we’ll keep perpetuating the tremendous inequity that currently affects our people.”

The deal

The free market deal called Tratado de Libre Comercio (TLC) has been in negotiations between Mercosur and the European Union for the last 20 years. A preliminary agreement was reached in 2019, but has since been left on stand-by.

The EU objects that Mercosur does not comply with Europe’s environmental requirements, like the 2015 Paris Agreement. Last month, the National Assembly of the French Parliament voted against Emmanuel Macron’s government accepting the Mercosur-EU deal on the grounds it could further deforestation. Rural producers in Europe have also stated their discomfort at the prospect of South American products competing against their own.

This is not the first time a EU legislative organism opposes the agreement. In 2020, the Dutch Parliament also halted the agreement’s approval.

According to Argentine Foreign minister Santiago Cafiero, the deal also needs to be updated to reduce the gap between the two organizations because the conditions are now asymmetrical and don’t reflect the current state of the South American continent. “Our trading level is above what was agreed upon in 2019,” he explained, adding that, with the criteria stated in the deal, Mercosur countries should export less.

Mercosur now needs to offer a counterproposal to Europe after the EU sent a side-letter on environmental requirements last March.