EU Makes Moves to Secure Trade Deals with Latin America
Now that the EU has finalized its landmark agreement with Cuba, could this be the start of a new chapter for European-Latin American relations? The new Political Dialouge and Co-operation Agreement (PDCA) was agreed in principal last year, and has finally come into effect as of 1st November. The agreement details new plans including improved trade co-operation, political dialogue and sector policy dialogue.
The EU representative for foreign policy Federica Mogherini stated in a recent interview that “The EU and Cuba are truly turning a page, and the new chapter of our partnership begins now – with the provisional application of our new agreement. This agreement also completes the network of ties with Latin America and the Caribbean and confirms our continued engagement with Latin America and the Caribbean.”
With the EU being Cuba’s second largest trade partner and biggest investor in sectors including tourism and agriculture, this is exciting news for both sides of the agreement. The PDCA will create a better trading relationship, will make access to EU markets easier and provide scope for improved development in both the public and private sectors. While the agreement does not include a free trade area, it does provide more stability for Cuba to trade with the EU.
Following this agreement, the EU is pushing for more trade deals with the South American trade bloc Mercosur. A trade agreement with Mercosur would be a huge step in the right direction for the EU, and would mean massive saving for exporters and access to a huge market for European goods such as vehicles and industrial products. According to the EU trade commission, over 66 Billion EUR of goods are exported to Mercosur annually, and a free trade agreement could massively improve those figures.
With growing uncertainty in the US markets, these new deals could provide some much needed stability to the EU. According to senior trade associate at advisory Global Counsel, Guillaume Ferlet, “The US will consequently fall behind in the race to competitive liberalisation abroad, and this has US exporters worried already. Besides, it would be additional evidence that for all its internal divisions the EU is nonetheless capable of seizing the momentum and filling the void left by the new US administration in world trade. It is the prospects of restricted access to the US market under the Trump administration that has led Japan, Mexico, Mercosur and others to seek a deal with the EU more actively, but the question has always been whether the EU can actually make good on these opportunities.”
The EU is also due to start trade agreement talks with Australia and New Zealand, so the pressure is on the commission to secure a deal with the Mercosur bloc, which includes Argentina, Brazil, Paraguay and Uruguay, as soon as possible. Otherwise the EU could find itself under immense pressure from its members as it will need to secure all three trade deals at once.