Euronews

The free trade agreement between the European Union and Mercosur countries should be implemented without delay, Paraguay’s President Santiago Peña told Euronews. He warned that stalling the agreement would be a “mistake” amid rising geopolitical tensions.

The free trade pact was signed last month by the EU and Mercosur members Brazil, Argentina, Paraguay and Uruguay. However, its full ratification by the EU has been frozen after MEPs referred the agreement to the Court of Justice in Luxembourg.

“We already presented the agreement to the Congress of the Paraguayan Nation last week, and we understand that the European Union has the legal tools to implement it temporarily,” Peña said on Euronews’s flagship interview programme The Europe Conversation.

“We are working to make this happen, and we want Paraguay to be the first country to implement it.” The country currently holds the rotating pro tempore presidency of Mercosur.

Despite the judicial review, the European Commission has the prerogative to provisionally apply the deal once one or more Mercosur countries complete national ratification. While Germany, Spain, Portugal and the Nordics are pushing for the next phase, the Commission currently says no decision has yet been made.

‘Opposition rooted in ignorance’

The agreement would create a vast EU–Latin America free-trade zone, slashing tariffs on goods and services. But resistance in Europe remains fierce, with farmers and several capitals, led by Paris, warning of unfair competition from Mercosur imports.

Peña said that European opposition to the deal was rooted in “ignorance” and an outdated and stereotypical view of Latin America.

“Our countries have changed tremendously. They have developed. Human capital has grown,” Peña said. “Europe has to rediscover Latin America.”

In the interview, Peña warned that rejecting the deal would amount to a strategic blunder, as Europe can no longer rely on the United States as its default trade partner due to President Donald Trump’s unpredictable policies.

“If (MEPs) ultimately prefer not to integrate themselves into (new) markets and instead choose to retain their old alliances that today no longer work, it would certainly be a mistake,” he said.

Still, Peña credited Trump with giving the deal “the final push” after 25 years of talks.

“The world was in a state of drowsiness,” he said. “We weren’t moving, and he came along to move us all. He came to challenge what we thought was stable, and that pushed us to leave our comfort zone.”

According to Peña, one of the EU-Mercosur deal’s key advantages is its potential to counter China’s growing presence in the region and dominance of rare earth supplies.

“Europe is losing an enormous opportunity there, because if there is a region that can compete globally, it is Latin America. We have young talent, a predominantly young population, a population (of people who are) already digital natives,” he said.

“We have that tremendous abundance of natural resources, not only food that grows above the ground, but also minerals that are below the earth, which are so critical to this new technological wave. Our region has absolutely everything that Europe and the world need.”

Former European Central Bank president Mario Draghi will attend an informal meeting of European Union leaders at the invitation of European Council President António Costa, who is looking to accelerate the implementation of his competitiveness report.

The retreat will take place on 12 February and will focus on boosting the European economy. Former Italian Prime Minister Enrico Letta will also participate in the gathering.

Draghi and Letta penned two influential reports on the EU single market and competitiveness in 2024.

In an interview with Euronews from New Delhi, where the EU signed a major trade deal with India, Costa said the retreat will serve to kickstart a cross-institutional debate on how to strengthen the European economy and implement their reform agenda.

“I invited Mario Draghi and Enrico Letta to join us as we take stock of what we’ve done but also look at what we need to deliver,” Costa said.

“We need to create renewed momentum and give a new impetus” to their call for reforms.

“I expect leaders to give clear political guidance to the Commission and the Council as they did last year on defence and security,” he added. “This time, for the single market.”

Costa has held a series of informal meetings bringing together the 27 leaders to brainstorm without the formalities of a European summit, which usually sees a stricter agenda and looks for compromise to deliver unanimous conclusions.

The retreat format, he argues, allows for more open discussions. Last year, leaders met alongside NATO Secretary General Mark Rutte and UK Prime Minister Keir Starmer to discuss European security and defence. By inviting Draghi and Letta, Costa hopes to reinstate momentum around their recommendations published in 2024.

Last year, the European Commission’s efforts focused on reducing red tape and cutting bureaucracy pegged to excessive EU regulation. While pushing for simplification of existing rules, analysts suggest the executive is not doing enough to push forward actual reforms in line with the recommendations of the two reports.

A report by the European Policy Innovation Council published in September last year suggested that only 11% of the recommendations listed in the Draghi report had been implemented in its first year even as the Commission referred to it as its economic compass.

Draghi’s attendance could serve to sharpen minds as the former ECB president is highly influential in diplomatic circles, the European capitals and the EU institutions where his speeches are closely monitored.

Draghi has repeatedly called for the bloc to work as a true union and called for a “pragmatic federalist” approach in a changing world.

Draghi has also expressed support for joint borrowing by EU member states to finance large projects of common interest such as security and defense, and called for the integration of the European capital markets to attract and scale up investments.

Watch the full interview with Council President António Costa on The Europe Conversation on Euronews on 28 January.