Lhe European Union (EU) – Mercosur (Brazil, Argentina, Uruguay and Paraguay) trade agreements, negotiated in 2019 but still not entered into force to date, illustrate Franco-German differences on trade issues, both in substance and the calendar.
Germany is looking for new partnerships. Aware of the existence of a window of opportunity, she believes that we can no longer delay and is trying to rally other European countries who sometimes fear that she wants to do “lone rider”.
In France, if the debate around reindustrialization predominates, that around the conclusion of new trade agreements is almost non-existent. Result: the Franco-German tandem, so essential to boost a dynamic at the EU level, which it urgently needs in the face of challenges amplified by Russia’s war of aggression in Ukraine, is in search of a compass.
Germany: awareness of the “politicization of trade”
However, several lights are green for the materialization of the EU-Mercosur agreements. The EU seeks to reduce its dependence on third countries and targets new partners. Mercosur countries want to strengthen their industrial base through foreign investment. The Spanish presidency of the EU Council, as well as the victory in the presidential elections of Luiz Inacio Lula da Silva, who succeeds the populist Jair Bolsonaro, in Brazil also foreshadowed a positive outcome to the conclusion of these agreements. Will Berlin and Paris manage to agree on this subject?
Germany is forced to reinvent its economic model in the face of a tense geopolitical context which calls into question the competitiveness of its industrial base. Security of supply chains has become a priority, and Berlin has been seeking energy alternatives to Russia since the outbreak of the war in Ukraine.
The growing awareness of “politicization of trade” also makes it more cautious in relation to China, another authoritarian regime which has already demonstrated on several occasions that it would not hesitate to use its economic weight to achieve political goals. It is to prevent these risks that Berlin included economic resilience in the German National Security Strategy adopted in June 2023 by the German government and supplemented by the “China Strategy” a month later. Particular emphasis is placed on reducing unilateral dependencies and on diversification.
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