On December 6, European Commission president Ursula von der Leyen and her counterparts from Mercosur countries finalized negotiations for the EU-Mercosur Partnership Agreement.
The agreement still requires ratification from EU Member States, and not all are fully satisfied with it. After reviewing the next steps and final ratification procedures—considering the population weight of each member state—we believe that the decision now largely rests in the hands of Italy. Italy’s position will be pivotal in tipping the balance between Germany-Spain and France-Poland. The reason for Italy is that even the combined population of France, Poland, Austria, and Ireland falls short of the 35% of the EU population required to block the agreement.
The agreement, after decades of negotiations, stalled in 2019. The current urgency to finalize it is partly driven by political will, reflecting significant changes in the geopolitical landscape over the past five years. One key factor is China’s growing trade with the MERCOSUR bloc, which increased by 55% from 2019 to 2024, compared to a 32% increase in the EU’s trade with the region.
Ten years ago, the total trade with MERCOSUR was the same for both the EU and China
Chinese President Xi Jinping’s state visit to the UK took place from October 20 to October 23, 2015. During this visit, President Xi referred to the relationship between China and the UK as entering a ‘Golden Era.’ He prominently used this phrase in his address to the British Parliament, where he emphasized strengthening bilateral relations, particularly in trade.
Since Xi’s address, China has accumulated nearly half a trillion dollars in trade surplus with the UK.
On December 3, the Ministry of Commerce announcedthe prohibition of exporting dual-use items to U.S. military users or for military use, adding that gallium, germanium, antimony, and super hard materials shall not be permitted for export to the United States
It was merely a token response to the U.S.’s additional restrictions on chip exports and other items to China. The reality is that no exports of the banned items have taken place since China announced that prior authorization is required. Experienced importers elsewhere understand that a prior authorization requirement serves as a serious red flag when sourcing a product. If sourcing from China, they quickly turn to more reliable and less arbitrary alternatives.
It is not uncommon for China to announce a detailed list of products suddenly banned from export for various reasons. However, when you check the export data for these products, you may find that for some of them, China has never actually exported them at all—or may not even have them. This serves as clear proof of a token gesture, offering nothing more than lip service.
Since 2020, EU imports of cars made in China have been growing at a compound annual rate of 17%
