Montevideo (AFP) – Brazil, Argentina, Uruguay, and Paraguay are hoping to announce a blockbuster trade deal with the European Union at a regional summit on Friday after a push by Brussels to get the long-delayed accord over the line. The deal between the 27-nation EU and the four founding members of South America’s Mercosur bloc would create the world’s biggest free trade zone. However, it has been dogged by resistance from France, particularly its famously militant farmers, who fear it would bring unfair competition.
The European Commission, which determines trade policy for the entire EU, has launched a renewed effort to definitively seal the deal. Germany and Spain, in particular, are advocating for a swift completion of the pact, which would benefit Brazilian beef producers and German car manufacturers, among others. German Foreign Minister Annalena Baerbock stated on Tuesday that it was “essential” for the EU to clinch an agreement this week, emphasizing that the summit of Mercosur leaders in Uruguay is “probably the last opportunity” to do so. Brazil’s left-wing President Luiz Inacio Lula da Silva, whose country dominates Mercosur, is also pushing for the finalization of the deal. “I intend to sign this agreement this year,” Lula said last week, brushing aside France’s misgivings.
The European Commission has not announced any plans for its chief, Ursula Von der Leyen, to attend the summit. Her task of navigating resistance to the deal became more complex last week when Poland, another significant European farming nation alongside France, also expressed opposition, deeming the deal unfavorable for “Polish farmers and food security.” France and Poland argue that their food producers would be penalized because they are held to more stringent environmental, sanitary, and labor standards than their South American counterparts. They need to forge a blocking minority of at least four countries representing 35 percent of the EU’s population to prevent the trade deal from occurring. South American farmers accuse them of protectionism.
In a sign of the rising tensions over the deal, Brazilian meat suppliers halted deliveries to national stores owned by the French supermarket chain Carrefour last week. This action was prompted by Carrefour’s CEO, Alexandre Bompard, who vowed not to “sell any meat coming from Mercosur” in Carrefour’s French stores, despite such sales already being minimal. The EU and Mercosur states reached a draft deal in principle in 2019 after two decades of negotiations, but it was never ratified due to EU concerns regarding the climate policies of then far-right Brazilian president Jair Bolsonaro.
Uruguay’s Foreign Minister Omar Paganini has described the Mercosur summit as a “critical moment” in the negotiations on a “historic” accord. The agreement would gradually reduce tariffs and quotas on trade between the EU and the four founding Mercosur countries, which together comprise more than 740 million people and a combined GDP of $21.3 trillion, according to the World Bank. EU leaders in favor of the deal assert that Europe needs to finalize the agreement to secure new markets in Latin America amid growing competition from China and to compensate for potential US tariff hikes when Donald Trump returns to the White House.
The summit will be the first for Argentina’s libertarian President Javier Milei, a proponent of US President-elect Trump. Like Uruguay, Argentina is advocating for Mercosur’s rules to be relaxed to allow member states to negotiate bilateral deals with countries outside the bloc. Milei, who was the first foreign leader to visit Trump at his Mar-a-Lago resort following his election win, is notably pushing for a free trade deal with the United States. Argentine Foreign Minister Gerardo Werthein warned that the bloc should “not be a corset that constrains you and does not allow you to grow.” Analysts suggest that failure to reach a deal with the EU could give Milei a reason to reconsider Argentina’s membership in Mercosur. “Leaving is not plan A,” an Argentine government source told the country’s Clarin newspaper, while acknowledging that in the absence of the bloc striking free-trade deals, Argentina could “evaluate leaving.”
© 2024 AFP
