Honourable Minister, Ladies and Gentlemen,
Buenos dias, good afternoon,
I must say this is the first time when I am addressing as big Argentinian audience as this – I am very excited. I wouldn't necessarily need to say anything, because I could easily subscribe to what Minister has just said.
Let me start by conveying a message from our President, President of the European Commission Jean-Claude Juncker. We are very glad, we are sincerely glad that our relationship between the EU and Argentina is flourishing again. We are likeminded, natural partners, and we share the same value basis: the rule of law and liberal democracy. We are both advocating for trade openness. We are both forced, but also willing to reform - because the world around us is changing all the time, and it is the only reason why we have to reform ourselves. Reform or not to reform is not an option - because the world around us is changing anyway. If you do not reform yourself, the others do. So to be reformist, or not to be reformist, is close to not being an ideological issue. The ideological issue is how to reform.
In the EU we believe in trade openness. Openness, rules-based trade and the rule of law are in the very DNA of the European Union. It is what the EU is all about. We replaced the rule of force after the Second World War by the rule of law, and established the world's largest Single Market, the internal market, because we believe in openness. And results in Europe have shown that greater openness can bear fruit. It helps you, and it forces you, to reform yourself. It helps you to get the fruits of globalisation. It is rules-based openness.
The reason why I came here is not to convince the Argentinian government of the benefits of the EU-Mercosur Association Agreement, because the Argentinian government has been the anchor in these negotiations. Your political leadership is of utmost importance, we are very grateful for it.
I came here to look how we can deal with the most difficult part of the negotiations. The EU is negotiating with 20 different countries or jurisdictions on trade agreements and we know that the end part of negotiations is always the most difficult. It is natural, because easy issues have already been addressed.
Only difficult issues remain. And here, at this particular moment in time, we need strong political leadership. We also need strong support from the stakeholders, from business community and from other stakeholders. It is too easy to break negotiations for small things, which may be crucial, which may be painful. You need to look at the whole big picture. We cannot let the tail wag the dog. Mercosur is a natural partner for us, and that is why we want this deal too.
Ladies and gentlemen, even though it took a long time to negotiate this agreement, we have made tremendous progress in the last year and a half. Thanks for strong political leadership.
We expect that the Association agreement will create strong ties between the EU and countries of Mercosur. It will also reinforce the internal cohesion of the Mercosur group, make it more effective as a functional market and it will enhance this region.
On a regional level, thank to our association, we would expect more common action, for instance in fighting drugs trade, organized crime and improving economic and social governance.
At a global level, the EU and Mercosur together may implement stronger action on the agenda 2030 for sustainable development, on fight against climate change, and on issues such as international migration; peace and security, and development cooperation.
Together, we are stronger to defend, at the world level, the values uniting our regions: respect for human rights, democracy and multilateralism. Together we can better promote and serve a rules-based world order - instead of a world ruled by law of the strong. At the same time, when some are building walls and pushing protectionism, we have a golden opportunity, a real momentum, to promote rules-based world order, and as part of it, rules-based trade. More open, more fair, values and rules-based.
On the trade front, I believe that this negotiation is of great importance to unlocking Mercosur's potential. An Association Agreement with the EU will anchor sound, rules-based principles in an international treaty, providing legal certainty for investors and innovators. It will signal a commitment to promoting a stable, predictable and fertile business environment. It will also signal a degree of openness, that is the hallmark of successful modern economies.
The world economy today is made up of integrated global value chains. Our economies are even more interconnected and virtually all companies need to buy inputs or sell their products internationally. Products and services are no longer made in any one place. Parts, components and raw materials from many different countries come together in a planetary production line. By opening up to each other, our companies will pay lower prices for inputs and get new clients. We will both be able to produce more for less by specialising in what we do best and exploiting economies of scale in larger markets. We will also benefit from the complementarity of our economies, given that, for instance, we grow fruit and vegetables at opposite ends of the year, which means that Europeans are able to enjoy fruits grown in Argentina when they are out of season in Europe. And our citizens will have more choices of products and services at lower prices.
These are the new rules and reality of global trade; those who isolate themselves and raise barriers are excluded from this reality. Global markets offer a great opportunity for products and businesses from Mercosur. By opening up more to the world, countries can also start to create, not just more jobs, but better jobs, higher up in the value chain and closer to the innovation frontier. Competition and innovation will be key to maintaining the central position of Mercosur countries as a supplier of regional markets and looking beyond the region to international markets.
Our two regional economies are already profoundly integrated. We are Mercosur's biggest trading partner and biggest foreign investor. Mercosur's investment in Europe is also considerable. More than 5% of European Foreign Direct Investment (FDI) is located in Mercosur countries and our capital stock rose from €130 billion in 2000 to €387 billion in 2014. Across the Mercosur region, over 5000 EU affiliates in sectors of retail, information and communication, financial services or transport employ more than 1.5 million people, and bring know-how and innovation to Argentina and Mercosur. In Brazil alone, a Spanish company Telefonica supplies nearly one hundred million people with access to phones, mobiles, TV and the internet, creating high-quality employment and bringing technological know-how. The Volkswagen plant in Pacheco, near Buenos Aires, sells its Amarok model in almost 70 markets all over the world. In Uruguay, new investment by leather company Bader has created 400 jobs; it exports car seats to Brazil and other markets.
So we are already closely integrated. But the Association Agreement will make this integration work even better for our people and our companies in the complex and rapidly changing world that we live in today.
The benefits are not just for big companies. Big companies can use experts and lawyers to help them get past trade barriers. Small companies need even more the barriers to be removed, with transparency and legal certainty. For Mexico, for instance, since 2000, our free trade agreement has allowed manufactured products to become more significant; today they represent 70% of its export to Europe.
Ladies and gentlemen, EU-Mercosur agreement has been in negotiation for a long time, but has gained new momentum recently. The strong commitment of the Argentinian government has been particularly instrumental in this respect, as Argentina understood the importance of what is at stake and worked closely with us to drive the process forward in a constructive spirit.
As said before, when we are entering the final stage of negotiations, there are only difficult issues left. That is why we need both strong political backing and also strong support from other stakeholders.
In the world we are hearing voices in favour of protectionism. At a time when some want to build walls, we want to bring them down. We have explained to our citizens that trade is one tool in our toolbox, which we can use for strengthening rules-based world order. It is also one tool in our toolbox, which can increase our prosperity and well-being. There may be short-term losses, but the medium-term and the long-term gains have proven to be many times greater.
Ladies and Gentlemen, I am excited being here, because we are this close to having a new, modern Association Agreement between the EU Member States and Mercosur. It is basically up to us to decide whether we can make it.
If we are successful, we can enjoy the fruits, in terms of employment, in terms of growing tax revenues, in terms of growing companies and also in terms of closer, stronger political relationship between Europe and Mercosur.
Thank you very much for your attention.