EU reaches long-sought Mercosur deal over Macron’s objections

Monteviedo: The European Union and the South American Mercosur bloc clinched on Dec 6 a long-sought trade deal over the vehement objections of France, which has pledged to lead a charge to obstruct its ratification.

The sides agreed in principle on the terms of the trade pact after European Commission President Ursula von der Leyen travelled to Uruguay to attend this week’s Mercosur summit, even though an enraged French President Emmanuel Macron 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 harness new markets for their goods amid fierce competition from China and Donald Trump’s tariff threats.

It would amount to the biggest trade agreement ever concluded by either bloc.

Ratification will be a long, difficult fight in the EU.

If it goes through, the deal would create an integrated market of 780 million consumers, providing a boost to the EU’s embattled manufacturing sector and Mercosur’s vast agricultural industry.

It would also strengthen the EU’s footprint in a region where China has emerged as a major industrial supplier and the main commodities purchaser, while helping insulate both blocs from a potential Trump trade war.

EU car exporters, in particular, stand to benefit from the gradual removal of current 35 per cent tariffs. High duties on industrial products like car parts, machinery, chemicals, clothing and textiles would also be eliminated.

But several European countries, particularly France and Poland, remain adamantly opposed, mostly over concerns about how it will impact the agriculture sector.

European farmers have feared that an inflow of goods from Latin America, produced at lower standards, puts them at an unfair disadvantage.

Mr Macron has faced outrage from farmers who oppose the deal, and is currently coping with the collapse of his government at home.

French officials close to Mr Macron have been critical of the EU’s Dr von der Leyen, insisting that the deal might be rejected by member states even after she signs it.

Given the large consensus in France against the deal, the fight is one that Mr Macron is likely to pursue as he faces a growing set of political challenges at home.

The two sides similarly reached a preliminary agreement in 2019, but never signed it due in large part to European protectionism and hostility toward the environmental policies of former Brazil president Jair Bolsonaro.

But Brazil’s current leader, Mr Luiz Inacio Lula da Silva, has served as one of the agreement’s most vocal proponents since taking office in 2023.

Uruguayan President Luis Lacalle Pou has also pushed hard for its completion.

Germany, which represents around a fifth of the EU population, is a strong backer of the deal, as is Spain.