EU does not depend on France to close an agreement with Mercosur, says Lula – 03/06/2024 – Market

President Luiz Inácio Lula da Silva (PT) said this Wednesday (6) that the European Union does not depend on France to sign an agreement with Mercosur, and “patience” if the French do not like the terms.

“My peace of mind is that the European Union does not depend on France to make an agreement. We are ready to sign an agreement with the EU today, but France has a problem with farmers,” he said. “France may not like [do acordo]but patience is part of it”, he stated.

Despite Lula’s declaration, the agreement needs to be unanimously approved by the European Council, which brings together all the leaders of the bloc’s members. Furthermore, it requires approval from the majority of the European Parliament and then from all national and regional Parliaments.

France has repeatedly expressed reservations about the EU-Mercosur deal and President Emmanuel Macron last week told Brussels that it would be impossible to conclude negotiations under current conditions.

Lula’s statement comes after a bilateral meeting and joint statement with the Prime Minister of Spain, Pedro Sánchez. The justification of the two leaders is that the commercial blocs need the agreement politically.

“The European Union needs this agreement, and Mercosur needs this agreement, it is no longer a matter of wanting or not wanting, liking or not liking. We need politically, economically and geographically to make this agreement. We need to send a signal to the world,” said Lula.

Sánchez, in turn, said that, after Russia’s war against Ukraine, Europe “learned the lesson” that it is necessary to find new partners and diversify investments. The conflict had a strong impact on the region’s economy, causing, among other things, gas shortages.

On February 7, the vice-president of the European Commission, Maros Sefcovic, stated that the conditions that would allow the European Union to conclude a trade agreement with Mercosur had not been met, but negotiations were continuing.

The planned free trade deal has come under intense political scrutiny in recent weeks amid protests by farmers who say they are being harmed by cheap imports from countries that do not respect Europe’s high environmental standards.

According to interlocutors, there are a series of obstacles that currently impede the progress of negotiations. The main one, the elections for the European Parliament, scheduled for June 2024.

Due to the fundamental role it plays in the processing of the commercial treaty, it is necessary to wait for the new political configuration of the body to continue with the conversations.

On the one hand, a strengthening of right-wing parties could increase the bloc’s protectionist bias. On the other hand, a possible reduction in the presence of the Greens in the European Legislature could reduce pressure for environmental rules that are seen by Mercosur partners as disguised trade barriers.

The blocking period should be even longer. There are no political conditions to deal with the agreement before the new European Commission — the Executive arm of the EU — is formed. As the choice depends on Parliament’s approval, the body should only be operating months after the parliamentary elections.

Another point that hinders the progress of the agreement are the demands defended by the French that the text under negotiation incorporates so-called mirror clauses. Through this mechanism, an imported item could only enter the European Union if it followed the same environmental and health requirements imposed on European producers.

Brazil considers this type of clause to be contrary to international legislation and considers that its incorporation would impede the agreement.