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The European Union Proposes Tripling Cooperation Funds to Strengthen Agreement with Mercosur

 Article by: Econ. José M. Estigarribia Villasanti.

June 3, 2024 – In an effort to finalize the free trade agreement (FTA) with Mercosur, the European Union (EU) has proposed a significant increase in cooperation funds destined for the countries of the South American bloc. This initiative arises in response to Mercosur's reluctance, which questions changes in the terms agreed upon in 2019, and seeks to introduce a balancing mechanism to meet European demands.

Currently, Paraguay receives €80 million in cooperation funds, being the largest beneficiary of European assistance programs in the region. Brazil and Argentina receive €70 million and €50 million respectively, totaling €200 million among these countries. The EU's proposal could triple this assistance, channeling it through non-reimbursable funds, subsidies, and loans to enable exporters to comply with EU standards.

Francisco García García, team leader for South America at the Directorate for Cooperation with Latin America of the European Commission, highlighted the EU's willingness to provide additional funds and ensure the successful implementation of the agreement with Mercosur. This agreement would not only strengthen trade relations but also political and cooperation policies between the regions, promoting regional integration and sustainable development.

The economic relationship between Paraguay and the EU has been long and fruitful, with the EU being one of the main trading and investing partners in Paraguay. In 2020, the EU was Paraguay's third-largest trading partner, with imports mainly consisting of agricultural products and exports of manufactured goods. Additionally, trade in services between the EU and Paraguay amounted to €360 million in 2019, with a significant surplus for the EU.

Technical and financial cooperation is based on the 1992 Framework Cooperation Agreement, with a budget of €168 million allocated for the 2014-2020 program. Currently, 27 projects are being implemented in priority sectors, promoting human rights, gender equality, combating climate change, and environmental conservation.

At the multilateral level, the EU and Mercosur continue to negotiate an Association Agreement that includes the creation of a free trade area. This agreement aims to strengthen political, economic, and cooperation relations, further consolidating the good relations between the EU and Paraguay.

The IVEJM Institute is doing its part to help European companies successfully enter Mercosur, and we trust that this treaty with the EU will be beneficial for both blocs.

For more information, visit the official website.,

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