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The EU and South American countries are close to clinching a long-delayed trade deal as European Commission president Ursula von der Leyen flies to Uruguay for the Mercosur summit this week.
Two officials said von der Leyen would head to Montevideo in the next 48 hours with the intention of finalising the agreement despite fierce opposition from French President Emmanuel Macron, who has attacked its potential impact on farmers and the environment
Brussels is determined to open new markets for its carmakers and other industrial companies as they struggle with cheap Chinese competition and the threat of tariffs from US president-elect Donald Trump.
But France, which is in crisis after its government collapsed, has been rallying other member states to oppose the deal with the Mercosur trade bloc, which has been under negotiation for more than two decades.
Mercosur — which consists of Brazil, Argentina, Uruguay, Paraguay and Bolivia — is also fragile, but with Trump’s arrival in the White House it has an interest in selling more beef and agricultural products in the EU.
Big soyabean and meat producers such as Argentina and Uruguay also want to avoid relying too much on China, which is growing more assertive in trade policy.
The accord would create a market of 780mn people and save businesses in Europe more than €4bn annually in tariffs, according to Brussels’ calculations. EU companies have €330bn of investments in the Mercosur quintet.
The officials said von der Leyen was travelling to the summit, which takes place on Thursday and Friday. “She doesn’t fly to Montevideo to come back without anything to show for it,” said one.
Ignacio Bartesaghi, director of the International Business Institute at Uruguay’s Catholic University, said Brazilian President Luiz Inácio Lula da Silva might push for von der Leyen to announce the recent completion of technical negotiations at the summit, even if political support for the deal in Europe remained in doubt.
Lula was trying to defuse tensions within Mercosur sparked by Argentina’s libertarian President Javier Milei and “wants to unveil some kind of success”, Bartesaghi said. Milei has expressed disdain for the bloc and is expected to use the summit to demand a relaxation of its external trade rules.
A minister in one Mercosur country said von der Leyen was expected to attend, adding that “negotiations are under way” on finalising a deal. “It depends more than anything on the EU,” he said.
Poland’s Prime Pinister Donald Tusk recently said he opposed the deal in its current form. Austria has pledged to try to block it, and the Dutch parliament has also passed a resolution condemning it. In order to muster enough votes to block its approval, however, another big member state such as Italy would have to join the dissenters’ ranks.
Germany, Spain and many other member states have pushed hard for the agreement.
The deal was first held up by the election of Jair Bolsonaro, the populist former leader of Brazil. The EU insisted on a declaration that would include binding commitments on protecting forests and fighting climate change. Talks accelerated with the return of the leftwing Lula last year, although he wanted more protection for Brazilian industry, including electric-vehicle makers.
The content of the final deal is not yet clear.
European farmers and environmental charities have already vowed to mobilise against it. They claim Mercosur’s farmers damage the environment and do not have to attain the same standards for animal treatment and pesticide use.
Ratification in the EU is not straightforward. Four or more states representing at least 35 per cent of the EU’s population could block it. It would also need to win the approval of the European parliament.
After that, chapters covering goods trade would come into effect. Other areas such as investment would do so if all 27 national parliaments agreed, which is nearly impossible.
The commission declined to comment.
Additional reporting by Michael Pooler in Rio de Janeiro
