EU, China, MERCOSUR, Vietnam: Trade and Political Dynamics

Posted on Mar 26, 2025 in Social sciences

EU-MERCOSUR Trade Agreement Negotiations

EU-MERCOSUR negotiations started in the 2000s, and it was not until 2019 that both institutions concluded negotiations for a trade agreement. In response, Italy and France alleged that sanitary and environmental measures were not justified.

Political Agreement Reached (December 2023)

Negotiations continued, and in December 2023, a political agreement for a partnership agreement was reached. Its main objective was to remove trade barriers, both tariffs and technical barriers.

Key Objectives and Impacts

  • The EU will mainly export technological products, aiming to counteract the influence of the US and China in technology.
  • Germany is expected to be the most benefited country.
  • Tariff Removal: EU: 92% of export products; Mercosur: 91% of export products.

Concerns and Sustainability

Concerns from EU Agriculture: Farmers, particularly in France, Poland, and Italy, allege unfair competition due to differences in production costs and environmental/sanitary measures.

However, the agreement includes a chapter on Trade and Sustainable Development, addressing:

  • Compliance with the Paris Agreement
  • Deforestation
  • Labor standards

Ratification Process

  • EU: The agreement must be approved by the EU Parliament and the EU Council. In the Council, approval requires votes from 55% of Member States, representing at least 65% of the EU population.
  • Mercosur: In Mercosur, the parliament of each member state must vote. If a member’s parliament does not agree, that country will not be part of the agreement.

Vietnam’s Bamboo Diplomacy and EU Relations

Bamboo Diplomacy in Vietnam refers to a flexible yet firm foreign policy approach, symbolized by bamboo’s ability to bend with the wind while remaining rooted. This strategy enables Vietnam to navigate complex international relationships and balance its ties with major powers like China, the U.S., and the European Union.

Vietnam-EU Relations

  • Economic Partnership: Vietnam has deepened its ties with the EU through the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). These agreements boost trade, investment, and economic cooperation.
  • Strategic Cooperation: The EU is an important partner for Vietnam in sustainable development, climate change mitigation, and capacity-building programs.
  • Balancing Powers: Through its bamboo diplomacy, Vietnam maintains strong ties with the EU as a counterbalance to its relations with China and the U.S., ensuring national sovereignty and economic independence while promoting multilateralism.
  • Shared Interests: Both Vietnam and the EU share a commitment to a rules-based international order and multilateral cooperation, particularly in areas like maritime security and human rights.

This diplomatic approach ensures Vietnam’s resilience in a complex global landscape while fostering mutually beneficial relationships with the EU.

China-EU Political and Economic Dynamics

Political Landscape in China

  • China is a one-party state governed by the Chinese Communist Party (CCP), with no competitive multiparty system.
  • President Xi Jinping has consolidated power by removing term limits, creating a more authoritarian regime.
  • Key issues include restricted dissent, media control, and lack of democratic freedoms.

Economic Landscape and EU Ties

  • Rapid economic growth has made China the world’s second-largest economy.
  • China is seen by the EU as a partner, competitor, and systemic rival.
  • Strong economic ties exist, with China being the EU’s second-largest trading partner.
  • Cooperation is crucial for global challenges like climate change and pandemic preparedness.

Key Issues in China-EU Relations

  • Human Rights: The EU condemns China’s actions in Hong Kong and Xinjiang (Uyghur re-education camps).
  • Taiwan: The EU supports a peaceful resolution, while China opposes independence.
  • Global Order: China advocates for an end to Western dominance in global governance and promotes initiatives like the Belt and Road Initiative (BRI), the Shanghai Cooperation Organization (SCO), and BRICS expansion.
  • Influence in Eastern Europe: Through the (former) 17+1 Forum, China finances projects (e.g., highways), creating economic dependencies.

EU’s Response Strategies

  • Advocates for a rules-based international system.
  • Imposes sanctions over human rights abuses (e.g., Xinjiang).
  • Competes with China’s Belt and Road Initiative via the Global Gateway Strategy (€300 billion).
  • Implements economic risk mitigation, such as foreign investment regulations.

MERCOSUR-Asia Relations Overview

Economic Interests and Opportunities

  • China as a Key Partner: China is MERCOSUR’s largest trading partner, importing commodities like soybeans, meat, and minerals, while exporting electronics, machinery, and technology.
    • Chinese investments focus on infrastructure, energy, and agriculture, strengthening ties with the region.
    • MERCOSUR is exploring a potential free trade agreement (FTA) with China, signaling deeper integration.
  • Trade with Other Asian Nations:
    • India: Has a Preferential Trade Agreement (PTA) with MERCOSUR, targeting limited tariff reductions but with plans for expansion.
    • Japan and South Korea: Are emerging investors in technology and energy. MERCOSUR is negotiating an FTA with South Korea, which could boost trade in automobiles and industrial goods.

Challenges in MERCOSUR-Asia Ties

  • Dependency on Commodities: MERCOSUR’s exports to Asia are heavily reliant on raw materials, creating a trade imbalance and increasing economic vulnerability.
  • Internal Cohesion Issues: MERCOSUR’s lack of internal agreement on trade policies slows negotiations with Asian countries and limits its global competitiveness.

Geopolitical Dynamics

  • China’s Growing Influence: China’s focus on Latin America aligns with its global strategy to secure resources and expand markets, challenging the traditional dominance of Europe and the U.S.
  • Diversification Strategy: Strengthening ties with Asia provides MERCOSUR an opportunity to diversify trade partners and reduce dependence on Western markets.