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EU-Mercosur free trade agreement signed

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European Commission President Ursula von der Leyen took a significant step last Friday by signing a landmark trade agreement with the South American bloc Mercosur.

“Today is truly a historic milestone,” von der Leyen stated after summit talks with the leaders of Mercosur in Montevideo, Uruguay.

The agreement focuses on reducing trade barriers. Tariffs on 91% of products traded between the EU and Mercosur will be gradually eliminated. According to European Commission calculations, this will result in annual savings of approximately €4 billion for European exporters.

South America has a competitive edge in agricultural raw materials and resources critical for climate transformation, while Europe specializes in supplying cars, machinery, and chemical products.

The EU is Mercosur’s second-largest trading partner after China, accounting for 15% of the bloc’s trade volume, compared to China’s 24% share.

Recently, trade volume for goods between the EU and Mercosur reached approximately €110 billion, representing about 2% of the EU’s total foreign trade.

The agreement, negotiated over 25 years, would establish a free trade zone encompassing more than 750 million people. However, it faces strong opposition from France, which fears cheap poultry and beef imports could harm its farmers.

Mercosur imposes some of the world’s highest external tariffs 35% on cars, 14-18% on car parts, 14-20% on machinery, and 18% on chemicals.

Under the agreement, 91% of these tariffs will be abolished, while the EU will eliminate 92% of its own import duties.

The EU also anticipates significant benefits from enhanced access to state infrastructure tenders and expanded market access in sectors like postal and logistics services, telecommunications, and finance.

In contrast to France, Germany has welcomed the deal. The Federation of German Industries (BDI) President Siegfried Russwurm hailed the agreement as a much-needed boost for German and European economies.

As of 2023, German exports to Mercosur totaled approximately $16 billion, leading EU countries. Germany’s exports are followed by those of Italy, Belgium, the Netherlands, and France. Customs reductions could save German companies €400-500 million annually. According to the German Chamber of Industry and Commerce (DIHK), 12,500 German companies export to Mercosur, with 72% being small and medium-sized enterprises. These exports support 244,000 jobs in Germany.

This agreement, which von der Leyen failed to secure during her first term, represents a major geopolitical victory as she embarks on her second term.

The deal aims to deepen ties between the EU and Mercosur members Brazil, Argentina, Uruguay, Paraguay, and new member Bolivia, amid rising global trade tensions.

At a joint press conference, von der Leyen emphasized: “We are sending a clear and strong message. We are showing that democracies can trust each other in an increasingly confrontational world. This agreement is not only an economic opportunity; it is also a political necessity.”

The visit of von der Leyen and EU trade chief Maroš Šefčovič to Uruguay to finalize the deal sparked unrest in France, where the government had fallen just hours earlier.

France is expected to intensify its opposition but will need to expand its coalition, which already includes Poland, Austria, and Ireland, to block the deal’s ratification.

French Trade Minister Sophie Primas stated: “France’s voice remains strong in Europe. We are not alone in opposing Mercosur in its current form. We can achieve a blocking minority.”

Paraguayan President Santiago Peña plans to visit France to convince President Emmanuel Macron to support the agreement. Meanwhile, Italy’s stance remains undecided, with Prime Minister Giorgia Meloni signaling conditional approval based on guarantees and compensation for the agricultural sector in the event of market imbalances.

As a major EU member, Italy’s decision could significantly impact the agreement’s fate.

The conclusion of political negotiations marks an important milestone for the EU-Mercosur agreement. However, the process is far from complete.

The finalized text will be published next week, allowing EU member states to express their views. It must undergo legal scrutiny and translation, which could take months.

To expedite the process, Brussels may separate the trade chapter from the political and cooperation pillar. This approach, if adopted, would require approval only from the EU Council and Parliament, bypassing the need for unanimity among member states.

Alternatively, full ratification of the agreement would require a qualified majority in the Council of Ministers (at least 15 countries representing 65% of the EU population). The political and cooperation pillar would require ratification by all national parliaments, potentially delaying implementation for years.

EUROPE

EU prepares retaliation against Trump’s tariffs

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European Commission President Ursula von der Leyen warned that the world would be “largely harmed” by the US’s new tariffs, stating that the EU is ready to retaliate but will first try to negotiate a deal.

Trump announced a 20% tariff on the EU as part of “reciprocal” tariffs on America’s largest trading partners.

The US President has long accused the EU of “unfair trade practices.”

Leyen stated on Thursday, April 3, that the bloc is “ready to respond” to US tariffs but emphasized that she prefers to negotiate to “remove remaining obstacles to transatlantic trade.”

Speaking during a visit to Uzbekistan, Leyen said, “We have completed the first package of counter-measures in response to the tariffs on steel. We are now preparing for more counter-measures to protect our interests and businesses should negotiations fail.”

Brussels will impose taxes on up to €26 billion worth of US goods on April 12 in response to steel and aluminum tariffs. Retaliation has not yet occurred against the 25% tariff on automobile exports announced last week.

Extending an olive branch to Trump, Leyen acknowledged that some countries “unfairly benefit” from global trade rules. However, she warned that “resorting to tariffs as your first and last resort will not solve the problem,” adding that tariffs would “harm consumers around the world” and increase the costs of groceries, medicine, and transportation.

Leyen pledged that the EU would “defend” targeted sectors, including automobiles and steel, and protect its market from dumped goods forcibly removed from the US market.

The Commission President added, “We will also closely monitor what the indirect effects of these tariffs might be because we cannot absorb global overcapacities, nor can we accept that our markets are being dumped into. Europe has everything it needs to weather this storm. We are in this together. If you deal with one of us, you deal with all of us.”

Behind the scenes, however, leaders are lobbying to ensure their industries are protected from EU countermeasures. France is trying to block proposed EU measures against bourbon whiskey, while Ireland has requested dairy taxes be lowered.

Italian Prime Minister Giorgia Meloni, one of Trump’s allies in Europe, previously stated that tariffs are “not appropriate for either side” and that she would seek an agreement with the US to “avoid a trade war.”

Trump accused the EU of targeting the US with a 39% tariff rate, a figure the commission states is 1%. The US President based this figure on other factors, such as VAT reaching 27% in some member states and restrictions on the import of chlorine-washed chicken and other agricultural products.

The White House is also targeting the bloc’s regulations and digital taxes on technology companies. In 2023, the EU exported €503 billion worth of goods to the US, yielding a surplus of €157 billion, but it had a deficit of €109 billion in services.

The EU may target US services by suspending certain intellectual property rights and excluding companies from public procurement contracts under the enforcement regulation. A step beyond this would be the first-time use of the “anti-coercion” instrument, but any measure will require the approval of a majority of member states.

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Europe considers NATO role in Ukraine ‘peacekeeping force’

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According to plans drawn up by a coalition of Western countries, NATO could play a key role in assisting a proposed European military mission to guarantee a peace agreement in Ukraine.

The proposal, discussed in talks led by France and the United Kingdom, envisions using NATO’s command and control structures to deploy an “assurance force” in Ukraine, according to officials familiar with the plans who spoke to the Financial Times (FT).

According to the proposal, this force would also benefit from the alliance’s joint intelligence, surveillance, and reconnaissance capabilities. Officials stated that the proposal is one of many options being discussed and could be modified before a final agreement.

NATO’s involvement is also seen by supporters of the “assurance force” as a way to indirectly involve the US in the effort and secure Washington’s tacit support.

US President Donald Trump has refused to be directly involved in any European-led mission, but the US’s military capabilities in Europe are an integral part of all NATO operations.

One of the officials said, “If we are going to deploy assets [to Ukraine] from dozens of countries, NATO is really the only [command and control] option we have available.”

The purpose of this force is to provide assurance of Europe’s commitment to Ukraine’s security if a ceasefire with Russia is implemented and to deter Moscow from attacking again.

The “coalition” talks, led by Paris and London with the participation of leaders and ministers from about 30 countries, have repeatedly emphasized that some form of “emergency support” from the US is critical for any deployment. The US is not a member of the coalition.

NATO Secretary General Mark Rutte also attended the leaders’ meetings and sent senior NATO officials to the group’s technical-level meetings. NATO’s headquarters in Brussels will also host the next meeting of the coalition defense ministers next week.

Another official said, “Politicians and diplomats don’t really know what it means to carry something like this out. You need soldiers from the beginning.”

NATO’s command and control structures and other assets can be used for non-NATO missions, including those carried out by the EU. However, this requires unanimous approval from the alliance members.

Some members of the coalition are hesitant to involve the military alliance in any final proposal, as Trump has stated that he does not want to be involved in any way in Ukraine after accepting a ceasefire.

Some countries, including Italy, have instead called for the UN to play a coordinating role in peacekeeping operations. Other countries, wary of Russian and Chinese vetoes in the UN Security Council, oppose this.

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Berlin considers deporting EU citizens over pro-Palestine protests

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Berlin immigration authorities have ordered three EU citizens and one US citizen to leave Germany, accusing them of “antisemitism and supporting terrorism” for protesting Israel’s attacks in Gaza.

The four activists—two Irish, one Polish, and one US citizen—claim that authorities in the German capital are “weaponizing immigration law” after being told they must leave the country by April 21 or face deportation, based on accusations such as chanting pro-Palestine slogans.

In a joint statement released on Tuesday, the group said their attempted deportation was part of an effort to “silence pro-Palestine voices and political dissent.” They compared their treatment to that of activists like Mahmoud Khalil, a Syrian-born Columbia University graduate and US green card holder who was detained and threatened with deportation by the Trump administration for participating in pro-Palestine demonstrations.

Alexander Gorski, a criminal and immigration lawyer representing two of the Berlin protesters, said he had not previously seen a deportation case where the concept of Staatsräson (the idea that Israel’s security is a central part of Germany’s national interest) was used as part of the justification for the decisions.

According to the Financial Times, the lawyer stated, “Basically, they are arguing that due to the German Staatsräson, it necessitates the heaviest measure that German immigration law knows. I have never seen such a political statement [as a justification for deportation] before.”

The Berlin Ministry of Interior and Sports, which oversees the city’s immigration office, confirmed that it had informed the four activists that their residence permits had been revoked.

The ministry stated that this decision was linked to protests at the Free University of Berlin in October 2024, during which a “violent, masked group” entered the building, causing “significant property damage, including graffiti.”

While criminal proceedings are ongoing, lawyer Gorski did not specify whether these charges applied to the four individuals ordered to leave the country.

Gorski said that the exact accusations against the four individuals at the time remained unclear, stating, “The police claimed that our clients participated in the attempt to occupy the university. But the police have not handed the file to the public prosecutor’s office. We have not been granted access to the files.”

The Berlin city administration declined to provide further information, citing data protection.

Gorski noted that this was not the first time German authorities had used immigration law as “a means of repression against social movements.” He said he had observed a pattern since Hamas’s Operation Al-Aqsa Flood attack on Israel on October 7, 2023.

Gorski stated that he had encountered over a dozen cases of Palestinians and other Arabs whose refugee status or residency had been revoked due to their participation in pro-Palestine rallies or social media posts deemed to support terrorism.

The Intercept, which first reported the story, stated that two of the four individuals were also accused of holding the arms of police officers or other protesters to prevent arrests during sit-in protests. In other instances, they were accused of chanting slogans such as “Free Palestine” and “From the river to the sea, Palestine will be free.”

Gorski said that these slogans were unfairly interpreted as indirect support for Hamas, which is considered a “terrorist” organization by the US, EU, and Israel.

Only one of the accusations, that 29-year-old Irish citizen Shane O’Brien allegedly called a police officer a “fascist,” went to criminal court. O’Brien was acquitted.

None of the four individuals have any prior convictions. Authorities are basing their decisions, which are being appealed by the protesters, on a provision that allows for the deportation of foreign nationals if they pose a danger to society.

The Berlin city administration stated, “Any criminal convictions will be taken into account in the relevant assessment. However, they do not constitute a prerequisite for the application of appropriate measures.”

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