The signing of the EU-Mercosur agreement marks a major milestone, creating one of the world’s largest free trade areas, even if significant hurdles remain. Gustavo Cadenas Delascio and Karim Karaki argue that the EU must leverage the deal through investment that advances economic, developmental and geostrategic goals, and explore its implications for the Global Gateway and the next MFF.
Summary
The signing of the EU-Mercosur Partnership Agreement (EMPA) marks a major geopolitical and economic milestone, even if it will face a formidable legal and political battle before it can fully enter into force. The agreement would create one of the world’s largest free trade areas and reinforce the EU’s strategy of diversifying alliances amid rising global fragmentation. Latin America, and Mercosur in particular, are strategically important for the EU’s open strategic autonomy. The region combines macroeconomic stability, investment-grade markets and a strong European corporate presence. However, delivery of the Global Gateway strategy in the region has lagged, mobilising just €31 billion of investments. This modest performance is concerning given the scale of the market and its needs, where €31 billion is simply not enough to ensure the effective implementation of the EMPA and support a more strategic partnership with the Latin America and the Caribbean region.
This brief argues that the EU’s next long-term budget, the 2028-2034 multiannual financial framework (MFF), must align resources with ambition. To do so, the EU must scale up financing for Latin America and the Caribbean, prioritise upstream project preparation, leverage regional development banks and strengthen coordination between trade, development finance institutions and export credit agencies. Without accelerated, focused implementation, the EMPA risks remaining a political achievement rather than becoming a strategic economic alliance.
About the Authors:
Gustavo Cadenas Delascio is a Marie Skłodowska-Curie PhD Fellow at the Centre for Global Sustainability. His research focuses on Financial Diplomacy, with an emphasis on the EU’s strategies for promoting green transformations in Latin America and the Caribbean