EU summit with Latin America: What's at stake?

The two-day EU-CELAC summit on July 17 and 18 in Brussels is the first time European Union, Latin American and Caribbean leaders have met in eight years — and they have much to discuss.

In the wake of Russia's full-scale invasion of Ukraine, the European Union wants to intensify relations with Latin America and the Caribbean. The EU's foreign policy chief, Josep Borrell, has said regions of the world that share similar values have to develop a strategic network. He has also said the EU needs to become less dependent on China.

That makes Latin American and Caribbean states potential suppliers of raw materials and energy as well as target markets and partners in the fight against climate change. With that in mind, the European Commission published its New Agenda for Relations between the EU and Latin America and the Caribbean in early June.

"We are key allies to strengthen the rules-based international order, stand up together for democracy, human rights and international peace and security," said Commission President Ursula von der Leyen. "We also have an interest in strengthening our political partnership and engagement."

The members of the Community of Latin American and Caribbean States (CELAC), which effectively comprises all American states apart from the US and Canada, want to revive their economies after the COVID-19 pandemic.

The EU is a highly welcome investor and trading partner. EU companies currently invest more in the region than Russia, China, India and Japan combined.

Free trade would create more jobs, which is one reason many of the 600 million inhabitants of the region are in favor of trade agreements with the EU and its population of 450 million. Over the past decade, the trade volume of goods and services between the two entities has risen by 40% to at least €369 billion ($414 billion).

What will become of the EU-Mercosur free trade agreement?

A free trade agreement between the EU and the Mercosur trade bloc — which comprises Brazil, Argentina, Uruguay and Paraguay — was announced in 2019, but has yet to be finalized and ratified. That was partly over concerns regarding deforestation of the Amazon rainforest, which intensified under Brazil's former right-wing populist president, Jair Bolsonaro. The EU would like to revive the agreement but wants Brazil to first commit to sustainable climate protection measures in an addendum.

However, Bolsonaro's successor, the left-wing Luiz Inacio Lula da Silva — also currently the acting head of Mercosur — has refused. Though deforestation in Brazil has dropped since he took office in January 2023, he does not want the EU to interfere with domestic policy and has criticized the bloc's demands as "unacceptable."

"Strategic partners do not negotiate on the basis of mistrust and threats of sanctions," Lula said in early July. He also added that the EU wanted to use the agreement to doom the Mercosur states into being suppliers of raw materials and minerals forever.

The European Commission also plans to seal trade agreements with Chile and Mexico. The EU-CELAC summit in Brussels could bring some new energy to negotiations and the faltering ratification process. The Mercosur agreement is expected to be in place by the end of the year.

What are the potential problems?

Brazil's new president is clearly too China-friendly for his EU trading partners. During his visit to Beijing in April, Lula agreed to more cooperation with Chinese President Xi Jinping.

While on a visit to Brazil in June, German Foreign Minister Annalena Baerbock expressed understanding that Sao Paulo and Rio de Janeiro were far from Ukraine and Russia's war. However, many Europeans are disgruntled that Lula has offered to act as a mediator in the war that he blames on the United States, rather than calling on Russia to withdraw its troops from Ukraine.

On the other hand, Brazil is the only one of the BRICS members, made up of Brazil, Russia, India, China and South Africa, to have voted to condemn Russia's aggression against Ukraine in the United Nations General Assembly.

European industry wants free trade agreements

Nineteen European business associations from across all sectors have called on EU institutions to ensure that the EU-Mercosur trade agreement be ratified as swiftly as possible.

"In particular, the EU-Mercosur agreement offers Europe a unique and timely opportunity to seize a first-mover advantage into the wider Latin America market," they wrote in an open letter on July 5.

While strict trade restrictions are currently still in place, the associations said Europe would have opportunities to lead the way in advancing trade with Mercosur and the rest of Latin America in the future.

Environmental group speak out against 'poisonous treaty'

The nonprofit environmental group Greenpeace has described the EU-Mercosur agreement as a "poisonous treaty" and has called for protests in Brussels. It said the agreement was outdated, and would facilitate the import and export of products that were harmful to the climate.

Greenpeace has claimed that inexpensive soybean meal and beef would be exported from Latin America under the deal, and that the EU was angling to export "climate-damaging products."

"Besides automobiles from the EU, pesticides in particular would be exported at a lower cost," said Greenpeace. "These poisonous substances are used, for example, for growing limes and will ultimately end up on our plates again."

Friends of the Earth Germany has also criticized the deforestation caused by the cultivation of genetically modified soy in Brazil and subsequent species extinction. That soy is mainly used as fodder for intensive meat production in the EU.

This article was originally written in German.