No menu items!

Energy could connect Mercosur with China

Now it could be as a group.

Brazil has slightly opened the door to a Mercosur (Southern Common Market) bloc negotiation for a free trade agreement (FTA) with China, and the sale of fuels could be one of the central negotiation points.

During his visit to Montevideo on 25 January, Brazilian President Luiz Inácio Lula da Silva said he was also willing to “talk” with the Asian giant about an agreement for which Uruguay has been negotiating individually for some time, and which has generated tensions with the other members of the bloc: Argentina, Brazil, and Paraguay.

Mercosur, Energy could connect Mercosur with ChinaIn an interview with Sputnik, the director of the Mercosur department of the Brazilian Foreign Ministry, Francisco Cannabrava, affirmed that Uruguay is a “tremendously important partner” and indicated that eventual negotiations as a bloc with Beijing could focus on energy issues.

“We need to examine what agreements we could have with China. I am telling you this on a very tentative basis. China is a very important trading partner, but there are other sectors that we can work on, for example, the energy area. China is a big demander of energy,” he said.

The official said Mercosur has “good capacity” for renewable or low-carbon sources.

“Argentina has gas; Brazil has ethanol… So we would have to somehow deal with the energy issue. We find it interesting to think about this. Besides, there is the investment part; China is a great world investor”, he added.

Cannabrava reiterated that these are “provisional” ideas for “future reflection”.

“It doesn’t mean that we already have a study or something very developed. We want to move forward with discussions,” he explained.

On January 25, Lula and his Uruguayan counterpart, Luis Lacalle Pou, discussed various aspects and sought a rapprochement of Montevideo’s efforts for an individual FTA with China.

The Brazilian president was willing to discuss an agreement as a bloc but stressed that it is “necessary and urgent” to close the FTA that Mercosur has been negotiating for more than 20 years with the European Union (EU).


Cannabrava stressed the importance of Uruguay to Brazil and the entire South American bloc.

“Uruguay is tremendously important for us; it is one of the founding partners of Mercosur, we have very important trade, we have investments… So for us, it is very important that Uruguay works within the bloc jointly and makes decisions,” he said.

He also said that Lula decided to make his first official visit as president to Buenos Aires and Montevideo out of “respect” for Uruguay.

“I think it is a message to help find ways to achieve a good understanding with Uruguay and for him to work with us,” he added.

He also said Brazil wants to show Uruguay that trade before the customs union was much lower.

“Brazil has high investments in Uruguay to sell products within the Mercosur area. We also want to advance in the definition of other agreements. We know that the agreement with the European Union is important for Uruguay, so the discussion between both presidents was to advance in the dialogue”, he expressed.


ON the other hand, the senior official said that the agreement between Mercosur and the EU will take time because it is “complex”.

“It is a very complex agreement. Naturally, it will take time (…) There are issues that still need to be discussed with the EU. There are some points concerning the intellectual property list of geographical indications that we are yet to close. There are questions about how to structure the agreement, which we still need to define, and this may impact the speed of how we are going to finish everything,” he said.

European Commission Vice President Frans Timmermans said the EU expects to sign the free trade agreement with Mercosur in July.

“It is one of the most important agreements we have. We have been negotiating for a long time now. The negotiations had different stages. Our assessment is that some points are missing to finalize the agreement, but we have made quite a lot of progress in the negotiations. The main negotiations have been concluded; now we are missing some more detailed points to start preparing the texts because each of them has to be approved by each of the congresses”, added Cannabrava.

However, he stressed that in the meeting between the German Chancellor (head of government) Olaf Scholz and Lula in Brasilia on Monday 30, “it was clear” that “there is a spirit of progress” and “that the agreement is important”.

Cannabrava added that the objective is that the agreement “maintains its balance” so that there is a “balance between the positions and is beneficial for both sides”.

Both blocs signed such an agreement in June 2019, two decades after the start of negotiations.

Still, it has not yet entered into force because it requires ratification by all member countries, and there are diverse positions within the EU.

In early October 2020, the European Parliament voted against ratification of the negotiated treaty due to doubts about the environmental commitments and safeguards contained in the text.

In October 2019, France announced it would not sign the treaty arguing that Brazil “does not respect the Amazon rainforest” or the Paris Agreement against climate change.

With information from Sputnik

Check out our other content