The Mercosur-EU Preferential Trade Agreement.

This paper first aims at assessing the economic and political importance of Mercosur for the
EU’s interests in the short and medium run – say for the one or two coming decades or so.
As Mercosur’s size is largely determined by Brazil’s size, this paper focuses on Brazil –
although the paper assumes that, from Brazil’s perspective, a Brazil–EU preferential trade
agreement (PTA) is a non-starter. It then aims at positioning the Mercosur–EU (MEU) PTA in
the context of the EU’s current trade policy. In particular, it tries to assess, once one takes
into account all the crucial goals to be met by the EU, whether the EU is likely to find the
time and the resources necessary for dealing properly with a MEU PTA; this effort is notably
complicated by the very divergent views on the role of trade between Brazil on the one hand,
and Argentina and Venezuela, on the other hand. Finally, the paper examines the PTA
options that can be seen as reasonably feasible. It suggests that, unless there are dramatic
changes in Mercosur’s present trajectory, the goal of negotiating a fully-fledged MEU PTA
should be set aside for some time – at least a decade or so. This does not mean leaving the
negotiating table, but rather focusing on negotiating topics that remain attractive to both
sides in the current context, and manageable and flexible enough to overcome the broad
general problems confronted by Mercosur and the EU.