The EU is Mercosur's first trading partner and its sixth most important export market. In addition, Mercosur has looked for inspiration in European institutions. Its Parliament (the Parlasur) was modelled along the lines of the European Parliament.
An EU-Mercosur trade agreement, as part of a bi-regional association agreement, has been the subject of long-running negotiations that began in 1999 and after a series of mishaps and hiatuses, was relaunched in 2010.
We have reached a crucial moment regarding this agreement. Mercosur is inching closer to the level of ambition set by the EU and is keen on liberalising their government procurement markets, in addition to such important sectors as automotive, machinery, chemicals and pharmaceuticals.
On a political level, the government of Brazil and its industrial sectors have come to terms with the need to liberalise the country's economy in the face of a financial downturn; in Argentina, a brand new political cycle has begun under the presidency of Mauricio Macri, openly in favour of the conclusion of the agreement; and there is a strong and lasting commitment on the part of Paraguay and Uruguay towards its consummation.
Reluctance vis-à-vis the agreement comes not from Mercosur countries, as has been the case in the past, but from specific sectors within the EU. There are sensitive items. Agricultural sectors in Ireland and France are exerting pressure on their governments to rule out some goods from the agreement, for fear that cheaper imports from Mercosur will push down its prices and production level.
Meanwhile, a study to assess the impact of trade agreements in the farming sector was released by the European Commission. Its conclusions are very interesting. There will be setbacks for some European products, like beef, and much-needed extra demand for others, like dairy.
But most importantly, the document shows that European farming industry has a production surplus and that it has become increasingly dependent on exports to third countries. This means that it is vital for our farmers to find new markets.
There are other challenges ahead. Venezuela was suspended last December because of its failure to implement the Mercosur acquis, but also as a consequence of the government's disregard for freedom of opposition and for an effective democratic cohabitation with the National Assembly.
At the same time, Mercosur lacks direction. Its leaders are aware of this and have manifested a will to find new approaches in order to define a refreshed vision and a new direction.
The agreement with EU could help Mercosur to find new purpose and to reinvent itself as a space for regional integration.
Europe needs new allies to overcome its recent loss of geopolitical relevance. Given its strong historical, cultural and linguistic ties with Europe, South America is an ally par excellence, and one of enormous potential: a young, vibrant and resourceful continent that has made great progress in rescuing its people from poverty and in consolidating its democratic institutions. Mercosur could well be the vector of this new strategic partnership.