The “finish line is in sight” for a long-delayed trade deal between EU and South American countries, European Commission president Ursula von der Leyen said as she arrived in Uruguay to meet leaders at the Mercosur summit.
“Let’s work...we have the chance to create a market of 700 million people,” she said in a post on X on Thursday. “The largest trade and investment partnership the world has ever seen. Both regions will benefit.”
Brussels is determined to open new markets for its carmakers and other industrial companies as they struggle with cheap Chinese competition and the threat of tariffs from US president-elect Donald Trump.
But France, whose political upheaval continues after the collapse of its government, has been rallying other member states to oppose the deal with the Mercosur trade bloc, which was agreed in principle in 2019 after almost decades of talks. Irish farmers have also voiced opposition to the deal.
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“Both the Taoiseach and the Tánaiste told the IFA National Council during the general election campaign that they were opposed to the Mercosur deal. They must carry this commitment forward and relay it at the highest level in Brussels,” IFA president Francie Gorman said on Wednesday.
President Emmanuel Macron says the deal would damage French farmers, who would be undercut by food produced to lower standards, as well as the Amazon rainforest.
Mercosur – which consists of Brazil, Argentina, Uruguay, Paraguay and Bolivia – is also fragile, but with Trump set to return to the White House it has an interest in selling more beef and industrial products in the EU.
Big soyabean and meat producers such as Argentina and Uruguay also want to avoid relying too much on China, which is growing more assertive in trade policy.
The accord would save businesses in Europe more than €4 billion annually in tariffs, according to Brussels’ calculations. EU companies have €330 billion of investments in the Mercosur quintet.
Ignacio Bartesaghi, director of the International Business Institute at Uruguay’s Catholic University, said a deal was not guaranteed. But Brazilian president Luiz Inácio Lula da Silva was trying to defuse tensions within Mercosur sparked by Argentina’s libertarian president Javier Milei and “wants to unveil some kind of success”.
Mr Milei has expressed disdain for the bloc and is expected to use the two-day summit to demand a relaxation of its external trade rules.
A minister in one Mercosur country said talks were continuing. “It depends more than anything on the EU,” he said.
Poland’s prime minister Donald Tusk recently said he opposed the deal in its current form. Austria has pledged to vote against it, and the Dutch parliament has also passed a resolution condemning it. In order to muster enough votes to block its approval, however, Mr Macron must recruit another big member state such as Italy.
“If the Italians are on board, there is no blocking minority so then we are in the clear,” said one senior EU official.
Thierry Mariani, an MEP from the far-right Rassemblement National which helped bring down the French government on Wednesday, mocked Mr Macron. “It is obvious that von der Leyen does not care about France’s position. But who in Brussels still cares about positions defended by Macron?” he posted on X.
EU and Mercosur officials were haggling over the final points in Montevideo.
Martin Kocher, Austria’s economy minister, told the FT there had been discussions with Brussels about an EU compensation mechanism for beef farmers which would be separate to the actual Mercosur deal. It would come into place if distortions in the market were identified and would provide payouts.
Germany, Spain and many other member states have pushed hard for the agreement.
The deal was first held up after the EU insisted on a declaration that would include binding commitments on protecting forests and fighting climate change. Talks accelerated with the return of the leftwing Lula last year, although he wanted more protection for Brazilian industry, including electric-vehicle makers.
European farmers and environmental charities have already vowed to mobilise against it. They claim Mercosur’s farmers damage the environment and do not have to attain the same standards for animal treatment and pesticide use.
Ratification in the EU is not straightforward. Four or more states representing at least 35 per cent of the EU’s population could block it. It would also need to win the approval of the European Parliament. The process could take up to a year.
After that, chapters covering goods trade would come into effect. Other areas such as investment would do so if all 27 national parliaments agreed, which is nearly impossible. – Copyright The Financial Times
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