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Brazilian President Luiz Inácio Lula da Silva said Saturday (Dec. 20) that the signing of the long-awaited free trade agreement between the European Union (EU) and Mercosur – a bloc formed by Argentina, Brazil, Bolivia, Paraguay, and Uruguay – which was scheduled to take place today, has been tentatively postponed until January.

The statement was made during the opening speech of the Mercosur Summit in Foz do Iguaçu, South Brazil. The meeting marks the end of Brazil’s presidency of the bloc, which will now pass to Paraguay for the next six months.

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Saturday’s meeting was also the date chosen by European leaders for the signing of the agreement to be finalized.

“We had the opportunity to send a key message to the world in defense of multilateralism and to strengthen our strategic position in an increasingly competitive global scenario. But, unfortunately, Europe has not yet made up its mind. European leaders have asked for more time to discuss additional agricultural protection measures,” Lula reported.

The agreement is now expected to be signed in January, he said.

“Yesterday, I received a letter from the presidents of the European Commission [Ursula von der Leyen] and the European Council [António Costa] in which they both express their expectation that the agreement will be approved in January,” the president stated.

Both Ursula von der Leyen and António Costa requested that the Mercosur Summit take place this Saturday, when they would be present, according to Lula, even in face of France’s well-known opposition to the trade agreement, due to fears of a loss of competitiveness in the agricultural sector.

The president reiterated that the postponement, however, was due to a problem with the Italian government, because of internal European Union issues regarding the distribution of funds for agriculture – and not opposition to the agreement itself.

Lula spoke about a telephone conversation he had with Italian Prime Minister Giorgia Meloni on this issue and said that Europeans are committed to the agreement even though France is opposed to it.

“I had a telephone conversation with her [Giorgia Meloni]. She said verbatim that she will be ready to sign in early January. If she is ready to sign and only France is missing, according to Ursula von der Leyen and António Costa, there will be no possibility for France, alone, to block the agreement. The agreement will be finalized, and I hope it will be signed, perhaps in the first month of Paraguay’s presidency, by my colleague Santiago Peña [Paraguayan president],” Lula declared.

Background

Negotiated for 26 years, the EU–Mercosur agreement involves a market of 722 million people and a GDP of USD 22 trillion. When signed, it should be one of the most comprehensive free trade agreements on the planet.

In 2019, the general terms of the agreement, which began in 1999, were unveiled. Last year, in Montevideo, Uruguay, a partnership agreement was signed, on the basis of which the texts of the trade treaty itself could be drafted for subsequent final signature.

Further partnerships

In his speech at the opening of Saturday’s summit, President Lula stated that Mercosur will remain committed to expanding trade agreements with other partners.

He cited, for example, the agreement with the European Free Trade Association (EFTA) – a group of countries with a combined GDP of almost one and a half trillion dollars.

In the last six months, discussions began on expanding the agreement with India. In the same period, negotiations with the United Arab Emirates advanced, and talks with Canada resumed.

Also on the table are negotiations for a strategic partnership with Japan and a tariff preference agreement with Vietnam.

Lula also highlighted the need to expand regional trade among Latin American countries.

“In the region, we hope to make rapid progress in negotiating an agreement with Panama. We also need to update agreements with other South American countries – such as Colombia and Ecuador. Intra-regional trade in South America is far below its potential. It accounts for only 15 percent of trade flows, while in Asia and Europe it stands around 60 percent. The inclusion of the sugar-alcohol and automotive sectors in Mercosur rules could help to change this situation,” he went on to say.

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