17 December 2024 – The European Union and the member countries of Mercosur have recently sealed a highly significant trade agreement at a critical moment for global geopolitics. This alliance has both supporters and detractors. There is concern that the EU’s agricultural policy will have to compete under less favorable conditions due to stricter regulations. In any case, a new trade scenario is emerging with the countries that form the Mercosur alliance: Argentina, Brazil, Paraguay, Uruguay, and Bolivia.
The President of the European Commission, Ursula von der Leyen, described it as a “win-win agreement” that will create a joint market of 800 million consumers and eliminate tariffs on more than 90% of goods. The impact of the first decisions announced by the new U.S. government is already being felt by other economic powers as they rush to seal advantageous, tariff-free trade agreements. Tariffs remain a controversial topic. Some economists argue that they can stimulate domestic production, as seen in the case of electric vehicles in the United States, but if not managed properly, they could limit consumption and generate additional trade tensions.
Source: Eurostat – Foreign Policy
In 2023, the EU already exported 56 billion euros worth of goods to Mercosur countries. Regardless of the challenges, there is no doubt that the conditions are in place for a significant increase in Atlantic maritime traffic. Mercosur’s exports mainly consist of meat, soybeans, sugar, and other raw materials, while Europe will export industrial goods, vehicles, pharmaceuticals, among other products. Latin American farmers and European car manufacturers will be the primary beneficiaries.
Beyond the EU-Mercosur agreement, the Latin American geopolitical landscape reveals an intense competition for influence, with China, the United States, and European powers striving to position themselves strategically in the region. Logistics infrastructure projects are emerging as key instruments of soft power and commercial integration. Peru, Chile, El Salvador, and Nicaragua have announced significant investments in port infrastructure.
The projected Nicaraguan canal, which would connect the Pacific Ocean with the Atlantic over a length of 445 km and is backed by Chinese capital, symbolizes this new geopolitical dynamic. Conceived as an alternative to the Panama Canal, it represents not only an investment in infrastructure but also a bold declaration of geopolitical intent.
In Peru, the new Chancay logistics hub, developed by the Chinese multinational COSCO, also exemplifies this trend. Its construction is no coincidence; it aligns with a calculated strategy to expand South-South trade routes, reducing reliance on traditional North-South axes.
This new geopolitical context reveals that port infrastructures are no longer mere logistical facilities but true instruments of diplomacy and economic growth. South-South trade flows are thus emerging as a real alternative to traditional trade circuits, where Latin American countries move beyond being mere suppliers of raw materials to become strategic partners.
These strategies once again highlight the importance of West Africa’s coastline and its infrastructures. A clear example is the policy initiatives of Morocco, which has launched a new maritime route between Agadir and Dakar to strengthen trade with West Africa, reducing transportation times for perishable goods. Additionally, the development of new infrastructure in Dakhla aims to transform transportation dynamics in Africa, increase the inflow of products into the sub-Saharan region, and enhance Short Sea Shipping services with neighboring states.
South-South maritime trade has become a strategic axis, transforming global supply chains. Driven by investments in port infrastructure, key trade agreements, and emerging geopolitical dynamics, this phenomenon presents both challenges and opportunities for a constantly evolving global economy. Most importantly, it strengthens activity in the Mid-Atlantic region across all levels. For instance, today the Kerch Strait has been closed following the sinking of two Russian oil tankers due to a storm. The Russian government has declared the area restricted to maritime traffic, resulting in the suspension of all Russian and Ukrainian grain exports passing from the Sea of Azov to the Black Sea. This incident will immediately increase the demand for Latin American grain exports and cause a corresponding rise in bulk carrier freight rates.
The growth of port infrastructures in Asia and Africa, along with the opening of new routes like those mentioned earlier, underscores the necessity for European ports to modernize in order to remain competitive in this evolving context. This includes adopting digital technologies to optimize port management and improve intermodal connectivity. Countries such as the United Arab Emirates and Turkey are leveraging investments in African ports to extend their economic and military influence across the continent. South-South maritime traffic is transforming global trade dynamics, offering new alternatives to traditional routes and adapting to emerging challenges. With a focus on sustainability, economic integration, and resilience, the Global South is not only solidifying its place in the global economy but also redefining the future of how goods and services will move across the world.
European maritime transport stands at a crossroads where sustainability, technology, and geopolitics converge.
Adapting to these challenges and seizing the opportunities will require robust international collaboration, investment in green infrastructure, and a commitment to sustainability. Above all, it will demand a broad strategic vision that embraces a constantly changing environment to ensure Europe is not left behind in shaping the future.
