The South American Common Market (Mercosur) and the European Union (EU) are meeting this week in Rio De Janeiro to discuss the possibility of an economic partnership. The meeting is one part substance and one part symbol.
The substantive side consists in the logical and perhaps overdue collaboration of two of the four largest trading blocs in the world. Any agreement that emerges from the week's negotiations would help organize and regulate the $44 billion worth of trade that annually occurs between the members of the two groups.On the symbolic side, Mercosur hopes the meeting will send a forceful message to the United States.
Mercosur wants the United States to know it is not the only suitor wooing South American trade, and hopes that these overtures toward Europe will inspire both the United States and Europe to start outdoing each other in their pursuit of South American favor. The rumor in Rio is that Mercosur will partner with the region that moves first to eliminate protectionist tariffs, most notably in steel and agricultural production.
In Europe, as in the United States, the elimination of protective policies is a politically dangerous move, and one rife with moral ambiguities. While it increases trade, it also has the potential to cost domestic jobs.
The debate over protectionism versus unrestricted free trade is long and complex, and the solution is far from clear. What is clear, however, is that U.S. trade policy should not respond to the veiled threats of colluding trading blocs. South America certainly has lucrative markets and important products, but it is not in a position to dictate U.S. policy simply by flirting with a rival. If the United States removes protective tariffs, it should be because it is the right thing to do, not because Mercosur has demanded it.