EU, Mercosur take free trade deal across finish line, but potential hurdles remain high By Reuters

By Lucinda Elliott, Lisandra Paraguassu and Philip Blenkinsop

MONTEVIDEO/BRUSSELS (Reuters) – The European Union and Mercosur pushed through a long-delayed free trade deal on Friday, announcing agreement – at least in principle – on the deal that has deeply divided nations in Europe.

At a news conference in Montevideo, European Commission President Ursula von der Leyen and her Mercosur counterparts welcomed the agreement after 25 years of negotiations, citing the need for free trade in the face of rising protectionism on a global scale.

“This agreement is not just an economic opportunity, it is a political necessity,” von der Leyen said. “I know strong winds are blowing in the opposite direction, towards isolation and fragmentation, but this agreement is our next response.”

European officials and supporters of the deal say it offers a way to reduce reliance on trade with China and protect EU countries from the impact of likely tariffs threatened by the US President-elect Donald Trump.

The trade deal, however, is just the beginning of what could be a long final phase to make it a reality. It must be legalized, translated and then approved by member countries, and could even be blocked, with France being the fiercest opponent.

A brief press conference in Montevideo highlighted some challenges. Only von der Leyen and Uruguayan President Luis Lacalle Pou spoke, without any further questions. The presidents of Brazil, Argentina and Paraguay remained silent.

“Only two of the five participants spoke and no questions were answered. That says a lot,” said a European source closely involved in the negotiations.

“It came out, but it came out, but only just… At least we have the association agreement, the rest will continue to play out in the coming days.”

As negotiators raced against time and opposed the deal at home, von der Leyen made a late call to fly to the Mercosur summit, which includes agricultural powerhouses Brazil and Argentina as well as Uruguay and Paraguay.

The deal included changes to government procurement, auto trade and exports of essential minerals compared to a version agreed in 2019. It also included an annex on environmental measures aimed at defusing South American fears over oil protectionism. EU.

“After more than two decades, we have concluded the negotiations on the agreement between Mercosur and the European Union,” Brazilian President Luiz Inácio Lula da Silva wrote on X.

Paraguayan President Santiago Peña acknowledged that the agreement was an important step, but warned that much remained to be done. “We have to be very realistic, we have a long way to go,” he told Mercosur leaders on Friday.

EU FARMERS IN OPPOSITION

France, the deal's most vocal critic within the EU, called it “unacceptable.” Highlighting the obstacles it now faces, French Trade Minister Sophie Primas pledged to resist the next steps, citing environmental and agricultural concerns.

European farmers have repeatedly protested an EU-Mercosur deal that they say would lead to cheap imports of South American products, including beef, that do not meet European environmental and food safety standards .

European agricultural lobby Copa-Coge reiterated its opposition to the deal on Friday and called for protests in Brussels.

Italy said on Thursday there were no conditions for reaching a deal. Poland said last week that it opposed the free trade agreement in its current form.

European green groups also widely oppose the deal. Friends of the Earth calls this agreement “climate destruction”.

Conversely, a group of EU members, including Germany and Spain, say the deal is vital for the bloc, which is seeking to diversify its trade after the near-closure of the Russian market and the unease caused by dependence on China.

“Spain will work to ensure that this agreement is approved by the majority of the (European) Council, because open trade with our sister countries in Latin America will make us all more prosperous and stronger,” said Spanish Prime Minister Pedro Sanchez on X.

Supporters of the EU deal see Mercosur as a market for European cars, machinery and chemicals and a potentially reliable source of essential minerals, such as lithium metal for batteries, needed for the green transition of Europe.

They also point to agricultural benefits, as the deal provides better access and lower customs duties for EU cheeses, ham and wine.

The trade deal would require approval from 15 of the EU's 27 members representing 65% of the EU population as well as a simple majority in the European Parliament.

South American negotiators remain optimistic that the EU will eventually give its agreement and that France will not succeed in rallying a blocking minority.