Argentine President Alberto Fernández transferred the rotating presidency of regional trade bloc Mercosur to Brazi’s Luiz Inácio “Lula” Da Silva at a summit in Puerto Iguazú, Misiones province.
While negotiations for an agreement with the European Union are being negotiated, the South American bloc reached the greatest commercial volume of its history in 2022. According to an official report, the volume of purchases and sales with the rest of the world topped US$ 752.6 billion. Exports within the bloc are also recovering.
Despite some heated discussions in the latest Mercosur summits, the bloc keeps delivering indicators that prove its relevance. Following a deceleration phase, commercial trade between full members regained impulse in the last two years and topped pre-pandemic levels by 38%. It went from US$ 33 billion in 2019 to US$ 46 billion in 2022 and has now reached its highest mark since 2014.
Government sources claim that nearly 60% of those exports are concentrated in industrially manufactured products, mainly in the medium-tech areas followed by agroindustry and fuel.
The European Union (EU) has already taken notice of the bloc’s commercial success and is trying to speed up the agreement that, despite being announced with lots of fanfare in 2019, still has “unresolved issues.” Last month, while visiting Brazil, the head of the European Commission Ursula von der Leyen said she has “the ambition of closing that as soon as possible, by the end of this year at the latest.”
“In this new and challenging global context, the agreement has even more strategic value than it had years ago,” said Secretary of International Economic Relations, Cecilia Todesca Bocco in an interview with Radio 10. “It needs to be updated, and we should add some elements to make the agreement good for both blocs.”
On this last issue, Mercosur countries are paying special attention to the impact the new European Green Deal will have on its exports since it lays out heavy-duty fines for products that don’t follow certain environmental requirements. The norm aims to reach “climate neutrality” by 2050
Brussels is offering a plan to promote investments in the region for more than US$10 billion. The European Union’s “carrot” is called Global Gateway: a financing program focused on the agendas of development and green tech support.
Massa aims to strengthen trade in local currencies
Economy Minister Sergio Massa, who also traveled to Puerto Iguazú, led the Monday meeting of the Common Market Council, which gathers top economic officials from every member country.
“In order to strengthen intra-Mercosur trade it is essential to consolidate agreements about payments in local currencies,” he said.
To that end, the head of Argentina’s Central Bank (BCRA) Miguel Pesce, and the president of the Uruguayan Central Bank, Diego Labat, signed a letter of intent committing to reducing costs in bilateral trade with local currencies.
“The goal of this agreement is to incorporate payments related to services trade (except those referring to financial services) and remittances, and enabling the indistinct use of Argentine and Uruguayan pesos when transferring resources,” said the BCRA in a press statement.
In that sense, Mercosur’s main partners Argentina and Brazil have been exploring a way to finance imports. The government is expecting an August meeting of the BRICS group that could decide on access to bank securities from the emerging countries bloc that could unlock the conversations that started in January this year.
Originally published in Ambito.com