MERCOSUR and its current relationship to the European Union: Prospects and challenges in a changing world

Summary:

This paper aims to scale the impact of the changing patterns of trade and FDI on the relations between the EU and MERCOSUR. Notably, we intend to discuss the new factors that influence the negotiations between both blocs, particularly the recent emergence of Brazil's new role as agent of dynamic change in the positioning of MERCOSUR in the international scene, and the shift of the axis of power of economic geography towards Southeast Asia and emerging economies.

Moreover, it is important to stress that this study was developed from the perspective of analytical concerns and interests of MERCOSUR, and more specifically, Brazil. For this reason, data and analysis are placed in view of its relevance for understanding the prospects for regional integration in the long term and definition of its strategic partnerships. Apart from the introduction, the paper is divided into six more sections. In section two, we present a brief description of the construction and configuration of MERCOSUR. In section three, we discuss the elements that explain the dynamic of this regional bloc, particularly the measures to strengthen the Customs Union, its position in South America, and intra-bloc trade and flow of FDI. Section four will summarize and describe the main phrases of negotiations with the EU and the reasons for its current stagnation. In section five, we will address the case of Brazil in this context of regional integration and strategic partnerships.

In the conclusion, we will present our main reflections about the need for a strategic alliance between MERCOSUR and EU, in a context of multilateral cooperation affected by successive economic and political changes.

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