Mercosur deal postponed: resistance from France and Italy

A setback for the President of the EU Commission Ursula von der Leyen and the German Chancellor Friedrich Merzwho campaigned until the end for the final signing of the agreement, which has been negotiated for more than 25 years. Austria’s Chancellor Christian Stocker stayed with his “No”to which he is bound by a resolution of the parliament in Vienna.

Von der Leyen has to cancel his flight

Von der Leyen told the 27 EU heads of state and government on Thursday evening in deliberations at the EU summit in Brussels that she would postpone her planned trip to Brazil for the signing on Saturday.

The reason is that the necessary two-thirds majority for a signature among the 27 states was not achieved. “The agreement will no longer be concluded this year. But it seems pretty certain that it will come, in mid-January,” said German government circles.

Initial reactions from the camp of supporters of the deal in Brussels are skeptical and disappointed. For example, the trade expert for the SPD in the EU, Bernd Lange, speaks of a “hanging match” and a “missed opportunity”. France in particular is not satisfied with the recently increased security measures for agriculture. Italy also wants to check these safeguards now; it is unclear at the moment whether the delay of one month that is currently being planned will be sufficient.

Criticism and warnings are already coming from business. The Chamber of Commerce is calling for “the last chance” to make a deal. Environmentalists like Greenpeace, on the other hand, are relieved.

Brazil gives the all-clear: deal remains on the table

Already in the evening, criticism came from the German chemical industry and the European Greens. Brazilian President Luiz Inácio Lula da Silva said after speaking with Italian Prime Minister Giorgia Meloni that she had assured him that she was not against the agreement but needed more time to convince her farmers. He indicated that the Mercosur states would support this.

Meloni gave assurances of a yes vote

According to participants, Meloni also gave the assurance of a “yes” vote to the EU heads of government in the deliberations. Italy has a special role because in the EU the final vote requires a qualified majority and not unanimity. Since France’s approval is no longer expected due to the traditional consideration for its own farmers and countries like Hungary also reject the free trade agreement, Italy’s approval is necessary to achieve a two-thirds majority.

In German government circles it was said that it had been agreed that the signing must now take place before January 20th, when the European Parliament meets again. It is possible that a lawsuit will be brought before the European Court of Justice there. However, it is feared that the court’s review would probably take longer than a year, which would ultimately cause the agreement to fail.

Disillusionment with postponement

Overcoming the hurdles to signing the EU trade agreement with the South American group of states Mercosur was, along with financing Ukraine, one of the two main topics at the EU summit in Brussels. At the beginning of the EU summit, Chancellor Friedrich Merz once again urged a decision. “This has been negotiated for 25 years now. Now it’s time to come to a decision,” said Merz in Brussels. “If the European Union wants to remain credible in trade policy around the world, decisions must be made now.”

Resistance remained stubborn, especially from France

In order to overcome the resistance of the large member states France and Italy, negotiators from the European Parliament and the EU states agreed on a compromise on Wednesday in the dispute over agricultural imports from the Mercosur countries. Accordingly, an investigation should be initiated if import volumes from South America increase by more than eight percent per year. They also agreed on a declaration that sets out EU measures for control, including in the Mercosur countries, to support farmers and to ensure compliance with production standards for pesticides and animal health.

The free trade agreement between the EU and Brazil, Argentina, Uruguay and Paraguay, as well as Bolivia, which joins the bloc, would create the largest trading area in the world with more than 720 million people. It would cover almost 20 percent of the global economy and more than 31 percent of global goods exports.

The chemical association VCI expressed disappointment about the postponement. “Frustration is growing. The fact that the seemingly endless impasse continues is not a good sign,” said Wolfgang Große Entrup, Managing Director of the Association of the Chemical Industry. “The failure of the agreement shortly before Christmas was averted. But the EU has once again missed the opportunity to emerge as a powerful player internationally.”

Criticism also comes from the Greens

Criticism came from the European Greens: “The postponement is a clear setback for Commission President Ursula von der Leyen. She has failed to address the legitimate concerns of countries like France,” said Anna Cavazzini, trade policy spokeswoman for the Greens in the European Parliament.

Approval by the European Parliament is by no means certain, as the agreement poses considerable risks for the environment and local agriculture. It turns out that “outdated mega trade agreements” are hardly capable of winning a majority anymore.