Resumen
The convergence of fragmented geopolitics, the protectionist shift in the United States, and growing Chinese-American rivalry presents a major opportunity for the European Union and Latin America to rethink their trade strategies. For both regions, deepening their relationship and building an integrated economic area is no longer just desirable: it has become a strategic priority that strengthens autonomy, supply chain resilience, and the defense of a rules-based multilateral trading system.
The foundations for taking this leap forward already exists. With the ratification of the EU-Mercosur agreement, European free trade agreements (FTAs) with Latin America and the Carribean (LAC) will cover 97% of the region´s GDP, well above the coverage of the United States (44%) and China (14%). Furthermore, the EU is already the largest investor in the region: its foreign direct investment (FDI) stock is two and a half times that of the United States and 25 times that of China. These are also highly complementary blocs: while Latin America provides critical minerals (lithium, copper) and abundant renewable energy that Europe needs for its green and digital transition, Europe provides capital, technology, and know-how, which constitutes fertile ground for the development of high value-added bi-regional supply chains.
The biggest obstacle is that the network of FTAs between the EU and Latin America operates in a fragmented manner: the rules of origin of each agreement do not “talk” to each other. Activating a flexible diagonal cumulation mechanism—whereby two countries (A and B) that already have an FTA can treat inputs from a third country (C), which also has FTAs with both A and B, as originating—would transform today’s patchwork of bilateral agreements into a more integrated and interoperable system.
Under this arrangement, inputs would qualify as originating as long as they meet the rule of origin applicable between the supplier (country C) and the final importer.
Such an approach would create a coherent regional interoperable system without requiring the renegotiation of existing agreements or the harmonization of all rules of origin on a product-by-product basis.
The proposed path is pragmatic, legally viable, relatively low-cost, and high-impact: it would suffice to incorporate a common protocol into existing agreements that enable cumulation of origin. Central America, the Andean countries, and Chile have all the conditions in place to start immediately; Mexico only needs to add the provision to its modernized treaty, and Mercosur could join once its agreement with the EU enters into force, with the prior inclusion of the same provision. The process would advance sequentially, respecting productive asymmetries and avoiding disruptions to existing Latin American rules of origin.
Implementing flexible diagonal cumulation would position the European Union as the core of a transatlantic economic area of 1.1 billion people, with a combined GDP comparable to that of the United States. It would stimulate the development of production chains between the EU and Latin America—as well as among Latin American countries—multiply bi-regional and intraregional trade flows, enhance legal certainty for businesses, and strengthen the joint EU-LAC voice in global economic governance. At a time of growing protectionism and supply chain reconfiguration, the initiative offers a concrete and high-impact response to underpin competitiveness, sustainable development, rules-based trade, and economic resilience and security on both sides of the Atlantic.