South America’s Mercosur trading bloc will meet in Uruguay on Thursday, with the group likely to use the occasion to announce a long-delayed trade deal with the European Union following last-minute negotiations to approve it.
The trade agreement, supported by the majority of South American countries and promoted by Germany and Spain, has encountered firm opposition from France, which fears that agricultural imports to Europe will affect its powerful agricultural sector.
Negotiators from all sides met in Brazil last week, senior diplomatic and government sources told Reuters, and delegations are scheduled to travel to Montevideo if a deal is reached during virtual talks that continue this week.
European Commission President Ursula von der Leyen could even travel to the December 5-6 summit in the Uruguayan capital, two European sources said, although most warned that nothing was likely to be signed. A source said the EU chief had booked a plane ticket just in case.
“The last round of negotiations ended with important progress,” Mauricio Lyrio, secretary of economic affairs at Brazil’s Ministry of Foreign Affairs, said Monday. “We are hopeful. The outstanding issues are being presented to the leaders for finalization.”
Bernd Lange, a German Social Democrat who chairs the European Parliament’s trade committee, said on Tuesday that the EU’s internal situation was the main obstacle to a deal and that a decision to travel this week remained uncertain.
“They are discussing on the 13th floor (the Commission president’s office) whether to take the luggage and go to the airport or not. It’s a bit complicated,” Lange said during a briefing.
The trade agreement, in the process of negotiation for more than two decades, has been delayed by European concern over agricultural competition, while Brazil, Argentina, Paraguay and Uruguay, large producers of soy, corn and beef, have criticized European protectionism.
However, Brazilian President Luiz Inácio Lula da Silva said last week that the deal was being negotiated directly with Von der Leyen in a new round of personal talks in Brazil. Lula is confident that the agreement will be closed this year.
Others, however, were skeptical. “If Úrsula goes to Montevideo it will be to show the EU’s commitment to the conclusion of the agreement, but it will not be signed,” said a European diplomat in Brasilia.
Another diplomat in Uruguay said: “I’m still 60-40 in favor of it going nowhere.”
Is there an agreement?
Paris has tried to convince other EU members to form a minority against it. Poland recently joined the opposition. However, France needs a minimum of three countries representing more than 35% of the EU population to block the deal.
Other EU countries, such as Germany and Spain, lead a coalition of 11 member states in favor. They want new trade routes that reduce dependence on China and insulate members from trade tariffs planned by US President-elect Donald Trump.
An agreement was initially reached between the EU and Mercosur in 2019, but it was never ratified due to EU demands for commitments on deforestation and climate change. Some officials fear the same thing could happen again now, even if a final text is agreed upon.
“While we will applaud if something is signed in Montevideo this week, we will see when it actually comes into effect,” said Ignacio Bartesaghi of the Catholic University of Uruguay.
A final, legally binding version of the agreement would also have to be carefully reviewed and translated into about two dozen languages before it could be formally signed, Brazilian negotiator Lyrio said. This could still take months.
Milei could debut
At the Montevideo summit, Argentina’s libertarian president, Javier Milei, is also expected to make his debut at a Mercosur event, following his thinly veiled threats to withdraw from the bloc unless he is allowed to pursue bilateral trade agreements outside of it, including with USA.
Like outgoing Uruguayan president Luis Lacalle Pou, Milei wants the group to be more flexible. Under Lacalle Pou, Uruguay had begun formal negotiations on a free trade agreement with China, a decision his successor was unlikely to maintain.
According to some diplomats, the EU-Mercosur talks will influence Milei’s approach to the group.
If the EU-Mercosur deal goes ahead, Uruguayan foreign policy adviser Bartesaghi said he would “pour cold water” on any Milei plan to sever ties with the bloc, because it would show he can achieve something.
A deal strengthens the “argument to keep the group together, buys time and reassures Milei,” he said, adding that if it fails, it could strengthen Milei’s argument.
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