Can the EU and South America boost their growth by their cooperation?

The economies of the European Union and South America both face some problems about their future growth. Britain is about to trigger Article 50 and start its negotiation with the European Union. Meanwhile, the new American Administration is in favour of protectionist and has encouraged companies to move their factories to America and stay in America. Under such circumstances, the European Union and South America are very likely to suffer trade volume decline in the near future, leading to their economic growth slow down.

The European Union and South American countries are working on a free trade deal between these two regions. They have comparative advantages, as the European countries are better at providing more qualified goods and services and South American countries have relatively cheaper labours, so their trade deal is mutually beneficial. However, how much such benefit could be is doubtful. As the potential growth of the cooperation between the two regions is estimable and relatively limited. Neither of these two regions I think cannot achieve a significantly high growth rate even after they start cooperation.

Firstly, previously these South American countries do not have the US has their important partner. Although the entire European Union has a greater economy than the US has in terms of the total GDP, the US is much closer to South American countries and such geographical advantage does not exist in the cooperation between the EU and South America. When the US has been enjoying a period of steady economic growth and decreasing unemployment since the Financial Crisis, these South American countries have not taken signifcant advantage of the US economic growth. And the European Union economy will shrink when Britain leaves the EU. In addition, the expansionary monetary policy seems to come to an end. The ECB president previously annouces his success in dealing with the low inflation issue in the Eurozone and the US Federal Reserve has started its rate hike path. The global monetary policy is moving towards contraction, this will reduce the economic growth rate, though it can be countered by stimulus fiscal policies.

Overall, the cooperation between the EU and South American is mutually benefit, but the final benenfit is likely to be insignificant and overestimated.