OBELA Analysis

The trade agreement between the Southern Common Market (MERCOSUR) and the European Union (EU) has been in the works for over two decades. It seeks to create one of the largest free trade zones, not only limited to tariff reductions but also to add investment regulations and an environmental commitment. This article will analyse the potential positive effects of the treaty, assess who it favours with its approval and estimate whether the European Union will approve it.

In 2024, it became clear that the West had lost the competition in electromobility to the East. American flagship companies such as Ford or GM are lagging in producing electric cars (EVs). Tesla, which until 2022 was the leading supplier of pure EVs, has been overtaken by Chinese manufacturer BYD since 2023 while facing difficulties in its sales, profit margins and supply chain intertwined with Asia. On the other side of the Atlantic, Germany's Volkswagen also showed that it could not compete with Asian companies by announcing the closure of two factories in its territory (an unprecedented move), which Chinese companies could take over. In Asia, Japanese companies can compete, especially Toyota, which leads in the production of hybrid EVs. Nissan and Honda announced plans to merge, in December 2024, and take on the Red Dragon cars. Although the deal with Nissan did not go through, the company is continuing with its restructuring plans. In this article, we will review what this means for Latin America as it transitions towards electromobility in the context of the trade war launched by Washington.

Latin America is caught in the middle of a great power conflict. On the one side is Washington and on the other Beijing. At the G20 meeting, Xi Jinping played a leading role thanks to his ally Brazil. On the other hand, former president Biden went almost unnoticed since Trump had been elected and his policies were contrary to what was discussed in Rio de Janeiro.  In this, international institutions play a major role. In this way the author sees the concept of spheres of influence where there is one dominant and one subordinate. In this article we will look at the alignment of Latin American countries with the great powers, and see which way the balance tips.