German chancellor calls for quick conclusion of EU-Mercosul free trade agreement

The German chancellor, Olaf Scholz, defended on Saturday (28) a quick conclusion of the negotiations on a free trade agreement between the European Union and Mercosul, during the first stop in Buenos Aires on his inaugural trip to the region.

Seeking to reduce Germany’s economic dependence on China, diversify its trade and strengthen relations with democracies around the world, Scholz is visiting Argentina, Chile and Brazil.

Berlim wants to reduce its dependence on China to obtain essential minerals for the energy transition, making Latin America, rich in resources, an important partner. The region’s potential for renewable energy production is another attractive one.

“There is great potential to further deepen our trade relations, and the possibilities that we can see from the EU-Mercosul agreement are clearly significant”, said Scholz in a collective interview with the Argentine president, Alberto Fernández.

Fernández blames European protectionism for delaying the agreement, initially signed in 2019, but not ratified by national parliaments. Ambassadors of the EU fear that Brazil needs to take concrete measures to prevent the increasing destruction of the Amazon forest accelerated intensely during the government of Jair Bolsonaro.

Berlim hopes that this concern can be put aside with the election of President Luiz Inácio Lula da Silva, who has promised to restore the country’s environmental policy. Scholz will meet Lula at the second fair (30) at the end of his three-day trip.

The Russian invasion of Ukraine, which triggered an energy crisis in Germany due to Germany’s strong dependence on Russian gas, raised awareness of the need to reduce economic dependence on authoritarian states.

For Germany to reduce its mineral dependency on China, it will need to embrace sectors it has avoided, says a German government authority at the sixth fair.

“For example, lithium mining is a challenging task, especially in relation to the environment and social standards,” he told reporters, who is traveling with Scholz.

Argentina and Chile are on the top of the “lithium triangle” of South America, which has the world’s largest repository of the metal used in electric car batteries.

About a couple of business executives — including the leaders of Aurubis, Europe’s largest copper producer, and energy company Wintershall Dea — are accompanying or declining.

Fernández said that he and Scholz will discuss the possibility of attracting German investment for the country’s vast gas reserves, lithium deposits and green hydrogen production.