Stop or still for the free trade agreement between Brussels and part of South America? The key to the answer could come this week from Rio de Janeiro. The city is hosting a two-day Mercosur summit this Wednesday, which will end with the meeting of heads of state. It will take place against the backdrop of the agreement with the European Union, the conclusion of which once again seems to be moving away.
Brazil, which currently holds the rotating presidency of the bloc also including Argentina, Uruguay and Paraguay, was hopeful of announcing the finalization of this agreement at the summit. But recent statements from Emmanuel Macron have had the effect of a cold shower, as has the pessimism of his Argentine counterpart Alberto Fernandez.
Twenty years of negotiations
Signed in 2019, after twenty years of negotiations, the treaty provides for the creation of the largest free trade zone on the planet. But it has still not been finalized, in particular due to reluctance on the EU side regarding Brazil’s environmental policies during the mandate of former President Jair Bolsonaro.
However, the situation changed with the return to power in January of left-wing leader Luiz Inacio Lula da Silva, who appears as a champion of the protection of the Amazon. The dialogue between Mercosur and the European Union has even intensified in recent weeks, with “significant progress”, declared Friday Lula and the President of the European Commission, Ursula von der Leyen, after a meeting on the sidelines of COP28 in Dubai .
But this optimism took a hit the next day, when Emmanuel Macron reiterated that he was “against the agreement”, shortly after his tête-à-tête with Lula in Dubai. While the agreement arouses fears in France from the agricultural sector, the French president deemed it “poorly patched together”, believing that it “does not take into account biodiversity and the climate”. Castigating France’s “protectionism”, Lula had to admit for the first time that the negotiations might not be successful by the end of the summit in Rio.
Paraguay’s ultimatum
The Vice-President of the European Commission and Trade Commissioner, Valdis Dombrovskis, assured him on X that the two parties have agreed to “bring the agreement to fruition as soon as possible”. The Brazilian president has no intention of throwing in the towel either. “As long as I have reason to believe that it is possible to finalize this agreement, I will fight,” he declared Monday alongside German Chancellor Olaf Scholz. The latter for his part called on all parties to make “compromises” and to act with “pragmatism”.
The new president of Paraguay, Santiago Peña, has launched a sort of ultimatum: if the agreement with the EU is not finalized by the end of the year, he will turn to others regional blocs when his country assumes the rotating presidency of Mercosur, starting in January.