France protests against EU-Mercosur trade agreement

The European Union and Mercosur countries intend to conclude negotiations by the end of the year on the long-delayed trade agreement after making progress in resolving contentious issues. Officials from both sides confirmed to the Financial Times that there is a new shift regarding the acceptance of the agreement that has been in preparation for two decades, despite France’s protests.

The agreement would create a market of 780 million people, and European companies would save more than €4 billion annually in tariffs, according to the European Commission. EU companies have €330 billion invested in five South American countries, including Brazil, Argentina, Uruguay, Paraguay, and Bolivia, indicating that these are sought-after destinations for EU exporters.

French President Emmanuel Macron began to increasingly oppose the agreement in January, stating that the agreement would harm the environment and expose farmers to unfair competition, but France has so far only been supported by Austria, which is insufficient to block the deal that requires approval from a majority of the 27 governments in the bloc.

EU officials claim they are now ready to face French opposition and insist that the agreement includes a commitment to implement the Paris Agreement, which commits to keeping global warming below 1.5 degrees Celsius. Germany, Spain, and many other member states have strongly advocated for the introduction of the agreement, which was initially sealed in 2019 but has since been in uncertainty. Proponents of the agreement believe it will stimulate the economy and trade relations between the two blocs amid rising global tensions.

Ursula von der Leyen, who was re-elected last month as President of the European Commission, previously committed to finalizing the agreement. She is expected to travel to Rio de Janeiro in November for the G20 summit, which could provide an opportunity to resolve all outstanding issues with Brazilian President Luiz Inácio Lula da Silva.

Protectionist tendencies

Mercosur members complain that European environmental concerns mask protectionist tendencies. Brasília was dissatisfied with the accompanying letter that Brussels sent last year, which sought to add binding commitments related to climate and forest protection. Other issues they disagreed with include a separate EU law against deforestation, which is set to come into force next year, prohibiting the import of goods such as timber, beef, and coffee produced on deforested land. According to one European official, Mercosur wants a guarantee from the European Union that the law will not undermine the benefits of the trade agreement for its exporters.

The agreement has not only faced disagreements in South America. It is also still somewhat unacceptable in Europe among farmers, who organized mass protests this year due to rising costs, falling profits, and new regulations while Brussels is trying to reduce ‘carbon emissions and improve biodiversity’ with its demands on farmers. They argue that cheaper products imported from South America are made according to lower standards than those in the EU.

Santiago Peña, the Paraguayan president, told the Financial Times last week that he ‘did not see much enthusiasm from European countries for progress’, although he acknowledged that von der Leyen and Macron had been busy with recent parliamentary elections in the EU and France.

While Argentine President Javier Milei expressed disdain for Mercosur during last year’s election campaign, he and his Foreign Minister Diana Mondino have since confirmed their support for the agreement. The Commission stated that the negotiating teams from both sides ‘continue to be in contact at a technical level to make progress on unresolved disagreements’, while Brussels added that they are focused on ‘ensuring that the agreement meets the EU’s sustainability goals while respecting the EU’s wishes in the agricultural sector.’