France is seeking support in scuttling the agreement from Italy, which, although it is a question mark, has important agricultural and industrial sectors. It has its own historic links with the Mercosur countries, which received many Italian immigrants in the late nineteenth and early twentieth centuries. A current tie is ideological. Both Italian prime minister Giorgia Meloni and Milei represent a new hard-right politics and have forged a personal relationship. For now, Italy is “studying” the agreement to see what “concrete guarantees” its farmers will receive.

On the Global Chessboard

The EU-Mercosur agreement has a larger dimension than simply whether it is good for car manufacturers or soya producers. With the world entering a phase of geopolitical rivalry, especially regarding access to natural resources, South America may have increasing importance for Europe. The salt flats of northwestern Argentina hold important reserves of lithium, a crucial input to batteries for electric vehicles. Argentina also provides a favorable regime for foreign investment in this resource, and China is already present in Argentine lithium development. The agreement with Mercosur may give European firms a leg up in their own efforts to assure access.

With oil and gas flows from Russia now disrupted, Europe may also be watching as Argentina develops the large “Vaca Muerta” shale formation. Construction of an oil pipeline to a South Atlantic port has begun, and a gas pipeline has been approved. Brazil has been developing its own vast offshore hydrocarbon potential, making it now among the world’s top ten oil producers—all the more reason for Europe to be interested in strengthening its relationships with Mercosur.

European engagement with Mercosur comes at a time when China is also active in the region, as was dramatically demonstrated by its development of extensive port facilities at Chancay, on Peru’s Pacific coast. Should necessary road and rail connections be built, this could provide a powerful incentive for further increasing already significant two-way trade between Mercosur and China.

What is striking is the United States’ absence from this game of nations. In the 1990s and early 2000s, it aggressively pursued trade agreements with Canada and Mexico (NAFTA, now USMCA), with Central America and the Dominican Republic (CAFTA-DR), and individually with several countries along the Andean Ridge—Colombia, Peru, and Chile. It was hoped that a unified Free Trade Area of the Americas would be created, knitting these agreements together. But Brazil and Argentina, historically suspicious of the United States and committed to the Mercosur project, remained aloof, even as the idea eventually lost traction within the United States, its principal promoter.

Uruguay, frustrated with its Mercosur straitjacket, has in recent years shown interest in a free trade agreement with the United States. Although a few U.S. congressmen have been receptive, its entreaties have fallen on deaf ears within the Biden administration, which, while less openly protectionist in its rhetoric than that of President Donald Trump in his first term, has had little interest in trade expansion. (Its one economic initiative for the region, the Americas Partnership for Economic Prosperity, offers no new trade access and has evoked little interest.)

So, it appears that Europe has stolen a march in solidifying its relations with key countries in South America. To the extent that the United States is left behind in selling goods and services to the Mercosur countries and accessing their natural resources while the European Union (and China as well) pay increasing attention to this area, it may live to regret its indifference.

Richard M. Sanders is a Senior Fellow, Western Hemisphere at the Center for the National Interest. A former member of the Senior Foreign Service of the U.S. Department of State, he served at embassies throughout Latin America and in positions in Washington dealing with the region, including as Director of the Office of Brazilian and Southern Cone Affairs.

Image: Shutterstock.