Lula threatens to walk away from EU-Mercosur trade deal
Warning comes after Italy and France pushed to delay vote on landmark agreement with South American nations
Brazilian president Luiz Inácio Lula da Silva has threatened to walk away from a blockbuster trade deal with the EU after key countries asked Brussels to delay a vote to approve the agreement.
France and Italy have asked to postpone a vote planned for this week that would allow the EU to sign the pact with the Mercosur trade bloc of South American countries on Saturday, demanding extra guarantees to protect European agriculture.
“I already warned them: if we don’t do it now, Brazil won’t make any more deals while I’m president,” Lula told a ministerial meeting on Wednesday.
“We’ve been waiting for this agreement for 26 years. The agreement is more favourable to them than to us. [French President Emmanuel] Macron doesn’t want to do it because of his farmers, Italy doesn’t want to do it for I don’t know what reason,” he said.
“We’ve conceded everything that diplomacy could possibly concede.”
EU officials said that European Commission president Ursula von der Leyen intended to travel to Brasília on Saturday to sign the accord.
Italy is demanding that Mercosur — which also includes Argentina, Uruguay and Paraguay — agrees to fresh binding protections for EU farmers.
Two EU diplomats said Rome was insisting on an exchange of notes to recognise measures that the EU would take if food imports damaged its producers’ incomes.
“If we do not sign this week it will die,” said a third EU diplomat. “The Latin Americans are getting tired of Europe.”
However, the diplomats said a compromise could be found at a summit in Brussels on Thursday.
Countries including Germany and Spain are desperate for the deal to increase their exports of cars and machinery. But with Poland also opposing the deal, Italy — whose industrial sector strongly supports the agreement — is needed to reach the requisite majority in favour.
In response to the opposition, the European Commission proposed a legally binding formula dictating its response if farmers were found to be disadvantaged by lowering tariffs on beef, chicken and cereals.
“Bilateral safeguards . . . to reassure farmers” must be “accepted by Mercosur by exchanging notes,” said one of the two EU diplomats.
The European parliament and member states were due to finalise the safeguards on Wednesday night. They would force the commission to investigate if imports increased or prices dropped in a single country, and potentially reimpose tariffs.
Italian Prime Minister Giorgia Meloni told the parliament in Rome on Wednesday that signing the deal this week was “premature”.
She welcomed additional measures including a compensation fund, more border checks and increasing inspections of producers in export countries, but added: “All these measures, although presented, have not yet been fully finalised.”
Maroš Šefčovič, EU trade commissioner, warned on Monday that delaying the approval vote could sink the deal, which would be the EU’s biggest ever.
“I think that this is a matter of the credibility and predictability of the EU,” he told the Financial Times.
“We talk often in Europe of the need to be strategic. There is a strategic decision to be taken.”
Benjamin Dousa, Sweden’s trade minister, told the FT in an interview that it was vital to show Europe was “open for business”. “Maybe we’re just sitting here on a sinking ship where we’re falling behind both Asia and of course the US,” Dousa said.
An official in a Mercosur nation said: “What is clear is that protectionism is alive and well within the EU.
“Concessions for Mercosur agribusiness were minimal, basically small quotas, and even so the protectionists make last-minute additional demands to a deal closed a year ago.”
Former Paraguayan president Santiago Peña in September 2023 told the FT that Mercosur would walk away if the EU did not finalise the long-delayed treaty. The two sides ended up reaching an agreement a year ago.