Can the EU-Mercosur deal still be saved?
Scholz and Lula want to fight for free trade agreements
December 4th, 2023, 6:30 p.m
France and Argentina are against concluding a trade agreement between the EU and the Mercosur states. According to media reports, it is said to have failed for the time being. However, Chancellor Scholz and Brazilian President Lula declare that they want to push through an agreement.
Chancellor Olaf Scholz and Brazilian President Luiz Inacio Lula da Silva have announced that they want to fight for the conclusion of the EU-Mercosur trade agreement. “I am convinced that there will be a majority in the EU Council and the EU Parliament for the agreement,” said Scholz in Berlin when asked how he wanted to deal with the resistance from French President Emmanuel Macron. Lula emphasized that all other French presidents before Macron had rejected such a trade agreement. “I’m not giving up on Macron,” Lula said. He advised the French President to talk to his wife and then agree to the agreement.
Lula referred to Thursday’s Mercosur summit in Brazil, where there will be a “decisive moment” for negotiations. “I hope that the EU decides that it is interested in the treaty,” he added. Scholz emphasized that Germany and Brazil were committed to a “swift” conclusion of the EU agreement with the four Mercosur countries Brazil, Argentina, Uruguay and Paraguay. Brazil and Germany supported the agreement in order to exploit the enormous potential in trade and economic relations.
“Brazil is our most important trading partner in South America,” emphasized Scholz. “More than 1,000 German-Brazilian companies make a significant contribution to this.” The agreement would create one of the world’s largest free trade zones with more than 700 million inhabitants. Discussions about this have been going on for well over 20 years. However, a fundamental agreement from 2019 will not be implemented due to ongoing concerns – for example about rainforest protection. Scholz said it was necessary to conclude the negotiations now.
Scholz asks for “the greatest possible pragmatism”
“There is a lot to be said for us improving relations between the European Union and Mercosur by bringing about such a trade agreement,” said Scholz. He is convinced that there will be a majority in favor of it in the European Council and the European Parliament once the agreement has been negotiated. “I ask everyone involved to be as pragmatic as possible and to be as willing to compromise as possible.” The German-Brazilian government consultations were the first in more than eight years. Both sides signed a joint declaration of intent on a partnership for a socially just and ecological transformation.
According to media reports, the EU-Mercosur trade agreement has failed for the time being. As the digital media company Table Media and the “Frankfurter Allgemeine Zeitung” (FAZ) reported, citing negotiating circles, the EU Commission no longer sees any chance of announcing an agreement at the Mercosur summit. However, the report does not indicate whether the talks will be broken off or whether a free trade agreement could be reached at a later date.
Commission President Ursula von der Leyen actually wanted to sign the agreement at the meeting with the Mercosur group in Rio de Janeiro on Thursday. But the agreement between the EU and Brazil, Argentina, Paraguay and Uruguay failed due to both resistance from Argentina and a lack of support from France. The Argentine government, which will be replaced in a few days, had signaled that it was not ready to reach a conclusion.
Argentina’s government tears up ‘bad contract’
The Argentine government warned in particular of the negative consequences of the planned free trade agreement with the European Union. “It is a bad contract that could have negative consequences for industry and agricultural exports,” said Argentina’s Foreign Minister Santiago Cafiero. “We have always advocated reopening the negotiations because in the current version not both blocs benefit, but rather the asymmetries are cemented and the existing productive, financial and technological differences are reinforced.”
At the Mercosur summit, Brazilian President Luiz Inácio Lula da Silva actually wanted to announce a breakthrough in negotiations with the EU. “We have made it clear to European negotiators since last week that they do not have the necessary flexibility to sign the agreement on Thursday, and now time is running out,” said Argentina’s Foreign Minister Cafiero.