Trade negotiations between the European Union and the Latin American Southern Common Market, or Mercosur, seem to be going badly, with French President Emmanuel Macron lambasting the current situation.
The latest talks between the European bloc and Mercosur (Brazil, Argentina, Paraguay and Uruguay) have been postponed as the newly elected President of Argentina Javier Milei is set to be inaugurated on December 10.
In France, resistance is brewing, undermining hopes of a swift trade agreement being reached between the EU and Mercosur.
On December 2, Macron declared: “I cannot ask our farmers and our industrial workers, in France and everywhere else in Europe, to make decarbonisation efforts while abolishing all customs duties at once to allow the entry of goods that are not subject to these rules.
“A few sentences were added at the beginning and at the end to please France – but this does not work.
“I am not in favour of this agreement because I don’t know how to justify it to a steel producer, a farmer or a French cement manufacturer,” he said.
“And since I can’t justify it at home, I won’t defend it at international summits either.”
A deal between the EU and Mercosur has been in the works for 20 years. In 2019, an agreement was signed but not ratified due to European worries over environmental policies.
The EU-Mercosur agreement would be the biggest free trade deal in EU history, with the potential to create an integrated market of 780 million consumers.
Most EU Member States support such a move and Europe had hoped to seal the agreement at the joint summit on December 7. That will not happen now as, alongside Macron’s resistance, Brazil – the current Mercosur president – did not want to impinge on the installation of its neighbour’s new government and cancelled the event in Rio de Janeiro.
Germany is among the most supportive of a deal, eying opportunities for supply-chain diversification and raw materials imports, alongside the establishment of a major new sales market.
Along with France, a few other European countries are opposing parts of the deal. The Dutch Parliament said agriculture could not be an element of the agreement as it would mean “unfair competition” for European farmers.
There are also European fears that imported South American meat is less safe for consumption and that it may contribute to deforestation in the Amazon region.
In South America, some doubts also exist. On December 3, outgoing Argentinian foreign minister Santiago Cafiero spoke of “a negative impact on Mercosur industry, without reporting benefits for agricultural exports, which are limited by highly restrictive quotas and subject to unilateral environmental regulations that expose them to future vulnerability.”
Milei’s incoming administration may be more positive, as the designated next Argentinian foreign minister Diana Mondino said a few days ago it was “much better to have the agreement” than not.