In the year of its centenary, it is important to highlight the 30 years that Telefónica has been present in Latin America. It is impossible to understand what Telefónica is today without taking into account the process of internationalisation that began in Chile in 1989, opening the way to expansion for many other Spanish companies. Today, Telefónica is the leading European telecommunications operator in Latin America, with a presence in 9 countries in the region, including Argentina, Brazil, Colombia, Peru, Chile, Mexico, Ecuador, Uruguay and Venezuela. With more than 226 million lines and almost 64 thousand employees in the region, Telefónica is a key player in the process of digital, environmental and social transformation in Latin America.
For all of the above reasons, we view with particular interest and excitement the recent announcement by the European Commission of the conclusion of negotiations on the Association Agreement between the European Union and Mercosur. Telefónica has operations in three Mercosur member countries: Brazil, where we operate under the Vivo brand, the largest operator in the country, Argentina, where we have Telefónica de Argentina, one of the leading operators in the market, and Uruguay, where we have a significant mobile operation.
Agreement with Mercosur makes a strong contribution to progress towards European Strategic Autonomy
The EU-Mercosur agreement is the largest and most ambitious trade agreement ever negotiated by both sides, providing regulatory certainty for both trade in goods and services and establishing better trade links between markets of 440 million and 260 million consumers respectively. But, in addition, the political agreement that was reached five years ago is crucial for progress on the path to European strategic sovereignty.
At Telefónica we are convinced that trade, international cooperation and sustainable development go hand in hand and this agreement is a relevant instrument in that sense. The EU-Mercosur Agreement includes advanced provisions on sustainable development that will foster cooperation and help mitigate climate change by obliging both parties to effectively implement the Paris Agreement.
We believe that the trade growth resulting from the agreement will support the ongoing transition towards a more sustainable economy in the Mercosur countries.
A particularly relevant agreement for Telefónica
The Agreement covers issues of relevance to the Telefónica Group, in particular, the agreement could be very beneficial in terms of prevention of anti-competitive practices and sectoral regulation and considers provisions in relation to key aspects for our business, such as efficient spectrum management ensuring fair and transparent procedures in future assignments.
From an industry perspective, the Telecommunications Services Chapter is far-reaching and provides regulatory certainty by ensuring the independence of Regulatory Authorities. In addition, the parties are committed to simplifying the authorisation regimes for the provision of services, which can be of great benefit to a highly bureaucratised sector.
Finally, the agreement could also be beneficial in terms of sharing experiences and results of new digital regulations, such as the Digital Markets Act or the Digital Services Act, which the EU has put in place.
In the chapter on telecommunications services, the Agreement strongly protects the “right to regulate” so as not to limit the ability of the parties to provide public services. To this end, the Agreement includes provisions relating to regulation of the sector (licensing, management of scarce resources and/or universal service obligations), as well as provisions to prevent anti-competitive practices.
It also includes provisions aimed at protecting users’ roaming or communications privacy rights. In particular, Article 27 of the Agreement states on anti-competitive practices: “The Parties shall introduce or maintain appropriate measures with the aim of preventing suppliers who, alone or jointly, are a major supplier from engaging in or maintaining anti-competitive practices“.
It also establishes a dispute settlement mechanism for telecommunications in Article 33 of the chapter itself, “In the event of a dispute between telecommunications network or service providers, the relevant national regulatory authority shall, at the request of either party, issue a binding decision to resolve the dispute in the shortest possible time“.
Despite this, it would have been positive to include a mechanism to bring investment arbitration to private persons. This would help to attract investment by providing it with greater legal certainty by ensuring that any disputes that may arise are resolved through an independent procedure subject to international law.
Chapter XX, however, does establish a dispute settlement mechanism for states and integration blocs that provides for consultations, mediation and arbitration for cross-border disputes arising from trade relations.
In addition, another tangible benefit will be the possibility to compete on a level playing field in public procurement. The European Commission stresses that this is “a novelty for any third country, as Mercosur has previously restricted its public tenders to domestic companies“.
In our view, the EU-Mercosur Association Agreement offers a unique opportunity to contribute to the economic growth of both regions by creating new market opportunities for goods and services, creating jobs and encouraging investment by giving stability to investments and providing a framework of greater legal certainty.
The agreement would also provide an avenue for cooperation between the two blocs, fundamental to making a more sustainable economy a reality. Non-ratification of the agreement would leave the EU and Mercosur with fewer instruments to build mutual trust and cooperate to face global challenges. Moreover, non-ratification would lead Mercosur countries to shift their trade to other trading partners with lower environmental and labour regulatory standards.
We appreciate the efforts of the parties and fully support the European Commission and the Mercosur countries in their objective to move towards the conclusion of the Agreement. We look forward to seeing it ratified very soon.
