🇪🇺 Why the EU Can’t Afford to Let the Mercosur Trade Deal Fail
Opinion - In a world tilting toward protectionism and geopolitical uncertainty, Europe must seize the rare opportunity for meaningful partnership with Latin America.
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Emmanuel Macron and Luiz Inácio Lula da Silva may never beat the bromance allegations.
Last month, the respective presidents of France and Brazil blanketed their social media profiles with images of themselves clasping hands in front of an Eiffel Tower lit in Brazil’s national colours. The warm embrace and picture-perfect smiles echoed similarly affectionate shots taken last year in the Brazilian Amazon.
Yet for all the friendly, press-ready camaraderie, Lula da Silva flew to Paris with one primary goal: to convince Macron to drop his opposition to the long-awaited trade agreement between the European Union and the five-country Mercosur bloc.
For some background info: France has long been the highest-profile opponent of the EU-Mercosur accord, primarily owing to fears that it would lead to a surge in cheap agricultural imports, harming the interests of French agricultural workers.
Despite this, and following a quarter-century of negotiations, the deal was finalised in December during European Commission President Ursula von der Leyen's visit to South America.
Since then, however, the EU has been wracked by internal disputes over its ratification, showing the complex politics surrounding the important trade deal.
Indigenous Brazilians recently visited the European Parliament to voice their opposition to the trade agreement due to fears it would lead to greater deforestation and encroachment on their lands. Friedrich Merz, the new Chancellor of Germany and a strong advocate for the deal, has repeatedly indicated he believes France will change its position despite both consistent denials from the Élysée and clear political signs from the French legislature.
However, this appears to be a little optimistic. In a recent non-binding vote in the National Assembly, 484 French deputies roundly condemned the deal, and the 70 who didn’t, all from the far-left La France Insoumise, only broke ranks as they felt the government’s opposition was too limited in scope.
So the EU-Mercosur accord is the rare issue to draw some semblance of consensus in contemporary French politics. But Paris is far from alone. In its effort to block ratification of what would be the EU’s largest trade deal to date, France has found common cause with Austria, Hungary, Ireland, and Poland, all of which have faced large-scale farmers’ protests in recent months.
Meanwhile, Germany is joined by Spain, Portugal, and the EU’s Nordic member states – as well as all voting Mercosur countries1 – in its support for the deal. To Berlin, the South American markets represent valuable opportunities for growing car and industrial exports at a time of tension with Europe’s largest trade partners, China and the United States.
Then, there’s Italy.
The government of Prime Minister Giorgia Meloni, long strategically ambiguous on its own position, has indicated that some changes in the deal’s agricultural section are needed in order to obtain its support.
As Italian opposition would end any chance for a qualified majority to ratify the trade deal in the European Council, it would appear some additional concessions from Lula and his Mercosur partners in this realm will ultimately prove necessary.
Faced with the possibility of yet another negotiating gridlock, and recalling that the last one lasted five years, it’s perhaps unsurprising that the European Commission postponed the early-July presentation of its legislative proposal on the accord to the European Parliament and member states.
However, these delays could not come at a worse time for the Commission, as the EU’s executive arm scrambles to hammer out some semblance of a tariff pause with the US while also struggling to formulate a coherent strategy towards an increasingly coercive China.
Indeed, this unique geopolitical moment explains precisely why the European Union cannot allow this deal to falter into obscurity once more.
With Russia’s unending assault on European democratic norms, transatlantic ties at an all-time low, and relations with China floundering between hostility and indifference, the EU finds itself beset on all sides by threats and adversaries.
Latin America, in contrast, has been named “the most Euro-compatible region on the planet” by José Manuel Albares, Spain’s foreign minister.
Meanwhile, the Mercosur governments, which have their own ideological divisions, are nonetheless ready and willing to embrace both greater trade and integration with Brussels, opening up doors to European firms and investment at a time when much of the world is receding into protectionism.
In fact, the hegemony of agricultural concerns betrays the substantial benefits of a deal which would allow Europeans tariff-free access to the large, relatively closed markets of Mercosur. The EU is already the bloc’s top foreign investor, led by Spain and the Netherlands, and the accord would scrap tariffs of up to 35% on big-ticket exports like cars and machinery to markets with weak local manufacturing.
Brazil possesses significant quantities of rare-earth minerals at a time when these resources are determining the outcome of trade disputes. Bolivia and Argentina have the largest lithium reserves worldwide and, with its massive Vaca Muerta deposit, Argentina is expected to both emerge as a natural gas powerhouse and join Brazil in the upper echelon of oil producers.
And all this comes at a time when Europe is in the throes of an energy crisis and seeking to diversify its suppliers away from hostile neighbors and tensions in the Middle East. Even within agriculture itself, the threats posed to EU beef and poultry are overblown and offset by the gains seen by European dairy, liquor, and wine.
Of course, as in any trade deal, there will be both benefits and trade-offs. The Commission is right to evaluate Mercosur’s alignment with EU standards on sustainability, labor rights, and deforestation.
The Brussels effect remains a potent tool, and one the EU27 must be prepared to wield. But instead, in countries like France and Poland, farmer protests have paralyzed the political arena and shut down any possibility of a deal, even one championed by business groups that see it as essential to Europe’s competitiveness at a moment of mounting global pressure.
As the recent conclusion of negotiations between Mercosur and the European Free Trade Association demonstrates, the world will not wait for Brussels to rediscover the importance of international trade agreements with complementary partners. There is still momentum to finalize this deal, particularly while Brazil and Denmark hold the pro tempore presidencies of both Mercosur and the European Council, respectively.
In any case, Macron and his counterparts in Rome and Warsaw shouldn’t let Europe’s economic future be held hostage by the agricultural lobby. The bloc faces too many strategic threats to its competitiveness and stability to let protectionism override long-term interests.
The EU needs reliable, complementary trade partners to anchor future growth, and that will remain true no matter what colours light up the Eiffel Tower.
Gabriel Cohen is a French-American political economist who serves as chief editor of Latinometrics. He is currently completing a PhD on Sino-European investment in Brazil at the Institut Barcelona d’Estudis Internacionals. His past bylines include Americas Quarterly, The Brazilian Report, Agenda Pública, and more.
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As of 2025, Mercosur consists of five countries: Argentina, Bolivia, Brazil, Paraguay, and Uruguay. Bolivia only recently acceded to the bloc and is currently in a four-year transitional period to adopt Mercosur’s rules before participating in joint trade ratification. The other member governments, ranging from left-leaning in Brazil and Uruguay to conservative in Argentina and Paraguay, have all signaled support for the deal in its current form.
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