Exclusive-EU Commission Says Mercosur Trade Deal A Priority As It Seeks New Allies

The European Commission has said it is a priority to conclude a long-delayed trade deal with South America's Mercosur bloc, as the EU seeks new allies to reduce its dependence on China and the United States, according to a document seen by Reuters.

The policy paper, due to be presented by the EU's top diplomat Josep Borrell on Wednesday, sets out the importance of securing priority access to Latin America's raw materials and other resources, in the face of "increasing geopolitical challenges".

It appeared to be a bid to give fresh impetus to efforts to rekindle relations with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay.

Such a deal would help the EU take a more independent stance and rely less on Beijing and on Washington, especially if Donald Trump wins re-election next year, EU diplomatic sources told Reuters.

An EU-Mercosur trade pact was agreed in principle in 2019 but is still waiting to be ratified in the parliaments of those countries involved.

France - where the deal is unpopular with local farmers - has since said it wants the Mercosur side to agree to various additional commitments, notably on respecting EU rules on deforestation, before it can back it.

"By strengthening the partnership between two regions that are among the world's most closely aligned in terms of interests and values, EU and LAC (the Latin America and Caribbean region) will be better placed to confront global challenges," the document, seen by Reuters on Monday, reads.

Latin America and Europe should work on reducing "excessive dependency" on third countries, it adds.

The document sets out a roadmap for concluding a number of free trade and partnership agreements with Latin American countries as soon as possible, as well as for boosting bilateral relations with Mexico and Brazil.

Many of the deals would build on an EU programme to invest in green and digital transition projects in Latin America which is due to be approved at a July 17-18 summit between the Community of Latin America and Caribbean States (CELAC) and the EU, the first since 2015.

The supply of energy resources to the EU will also play a prominent role in the new relationship, with Brussels looking to sign agreements with Latin American countries as envisaged under the EU's new Critical Raw Materials strategy, document says.

That aims to mitigate the risks to supply chains for materials related to sustainable energy that were highlighted by shortages during the pandemic and in the energy crisis following Russia's invasion of Ukraine.

Negotiations are most advanced with Chile and Argentina, and a deal could be announced as early as July, according to the European diplomatic sources.