The European Union and the South American Mercosur bloc have struck a long-sought trade deal despite vehement objections from France, which has pledged to lead action to obstruct its ratification.
The parties agreed in principle to the terms of the trade pact this Friday (6), after the president of the European Commission, Ursula von der Leyen, traveled to Uruguay to participate in this week’s Mercosur summit. French President Emmanuel Macron, however, infuriated, told her the terms were “unacceptable”.
After more than two decades of negotiations, the deal is a chance for the EU and the South American customs union founded by Argentina, Brazil, Paraguay and Uruguay to seize new markets for their products amid fierce competition from China and tariff threats. of President-elect Donald Trump. This would be the largest commercial agreement ever concluded by either bloc.
“This deal is a victory for Europe,” von der Leyen said in announcing the agreement, noting that it includes safeguards designed to protect the bloc’s farmers. “This will create huge business opportunities.”
Ratification will be a long and difficult struggle in the EU. If approved, the deal would create an integrated market of 780 million consumers, boosting the EU’s struggling manufacturing sector and Mercosur’s vast agricultural sector. It would also strengthen the EU’s presence in a region where China has emerged as a major industrial supplier and top commodity buyer, while helping to insulate both blocs from a potential Trump trade war.
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EU car exporters in particular could benefit from the gradual removal of the current 35% tariffs. High tariffs on industrial products such as automobile parts, machinery, chemicals, clothing and textiles would also be eliminated.
However, several European countries, especially France and Poland, remain firmly opposed, mainly due to concerns about how it will affect the agricultural sector. European farmers say that Latin American products are produced with lower standards, which would give agriculture in Mercosur countries an unfair advantage.
South American producers have rejected the arguments of the French and Poles. They reaffirm the quality and environmental standards followed by the bloc’s countries and say that the criticisms are, in fact, pure protectionism.
Macron has faced outrage from farmers opposing the deal and is currently dealing with the collapse of his government in the country. French officials close to Macron have criticized the EU’s Ursula von der Leyen, insisting the deal could be rejected by member states even after it is signed by her.
Given the large consensus in France against the deal, Macron is likely to continue the fight as he faces a growing set of domestic political challenges. Macron’s office did not immediately respond to a request for comment.
The deal is also likely to provoke political tensions and anger from farmers in Poland, which will hold a presidential election in the spring of 2025. Polish Prime Minister Donald Tusk said his government, which also includes a farmer-backed junior coalition party , will oppose the agreement. Tusk raised internal factors for his decision, saying the deal would have repercussions for Polish agriculture.
Germany, which represents around a fifth of the EU’s population, is a strong supporter of the deal, as is Spain.
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Similarly, the two sides reached a preliminary agreement in 2019 but never signed it due in large part to European protectionism and hostility toward the environmental policies of Brazil’s former president, Jair Bolsonaro.
However, Brazil’s current leader, Luiz Inácio Lula da Silva, has been one of the agreement’s strongest supporters since taking office in 2023. Uruguayan president, Luis Lacalle Pou, has also been committed to ensuring that the agreement is concluded.
“In life, it is more difficult to destroy than to build,” said Lacalle Pou. “This announcement demands the best policy.”
For Mercosur’s largest economy, Brazil, the agreement should further boost exports from the country’s gigantic agricultural commodities sector. The latest study by the Institute for Applied Economic Research (IPEA) showed that agriculture-related exports to the European bloc could grow by another US$7.1 billion between 2024 and 2040.
Products such as pork, poultry, vegetable oils and fats could be the main winners, while in coffee the country hopes to expand the sale of green beans to ship value-added products such as instant coffee.
Although there is the possibility of an agreement to reduce tariffs and facilitate access for Brazilian products to the bloc, the South American nation will also have to work to meet Europe’s growing environmental demands. New anti-deforestation rules in Europe have the potential to affect around two-thirds of Brazil’s agricultural exports to Europe, said Sueme Mori Andrade, director of International Relations at the Brazilian Confederation of Agriculture and Livestock.
