What’s preventing the EU-Mercosur trade agreement?

Brazil’s political future is uncertain; Argentina’s economic landscape is terrifying, and U.S. President Donald Trump is waging a trade war with China. This is the backdrop leading up to the latest round of talks between the European Union and South American trade bloc Mercosur regarding the negotiation of a free trade agreement. The meeting in Montevideo, held between September 10 and 14, was yet another attempt to push forward talks which started over 20 years ago and, while diplomats were optimistic, once again nothing was signed.

The truth is, the ideal moment for the trade agreement between the two regional blocs has already passed.

A window of opportunity opened in 2017. Back then, Brazilian President Michel Temer had some positive economic figures to show for itself, while Argentina’s president Mauricio Macri was preaching for a renewed, more open to the world version of Mercosur, and Donald Trump threatened Europe with trade tariffs.

Those conditions created a perception that increasing trade between South America and Europe would be a win-win situation. “In December 2017, we believed that a deal was coming, but, as we saw, it wasn’t,” says Lucas Ferraz, a professor at the Economics School of Fundação Getulio Vargas (FGV). He points out that they are yet to sign even a political accord.

Nine months later, negotiations seem to be on hold as Brazil heads to the polls on October 7 to choose a new president and a new Congress. Brazilian diplomatic instruments usually don’t suffer significant changes, regardless of who is the head of state, but the pace of negotiations can vary depending on who gets elected. Besides, Europe is set to remain distant until it can work out how Brazil’s political landscape will look after the election.

“Government changes tend to put the brakes on negotiations of this kind – and...