EU trade deal with South America ‘within reach’ – von der Leyen

The bloc expects the long-delayed free trade agreement to be finalized by the end of the year

A free trade deal between the EU and the Mercosur bloc of South American economies, comprising Argentina, Brazil, Paraguay, and Uruguay, may be finalized by the end of the year, European Commission President Ursula von der Leyen said on Monday.

At a meeting with President Luiz Inacio Lula da Silva of Brazil, the largest of the Mercosur member states, she said the deal was “within reach,” and that the parties are currently working to sort out the remaining differences.

“What we want to discuss today is how to further connect our people and our businesses, how to reduce risks and strengthen and diversify our supply chains, and how to modernize our economies in a way that reduces inequalities and benefits all,” von der Leyen stated.

“All of this is within our reach if we get the EU-Mercosur agreement over the finish line, and we are committed to resolving any remaining differences as soon as possible.”

She noted that Brussels has committed to investing up to €45 billion ($50.6 billion) in Latin America and countries in the Caribbean by 2027, including in the green energy sector.

The Brazilian president said his country is committed to finalizing the trade deal, but noted that he expects the agreement to be “balanced” and without “unreasonable” environmental demands.

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“Everyone knows that Brazil will do its part on the climate issue. We have a commitment to zero deforestation in the Amazon by 2030. And during this debate we want to make the European Commission understand that there are 50 million inhabitants in the South American Amazon who need decent and dignified survival conditions,” he stated.

The EU-Mercosur trade deal talks started in 2000 but were later stalled after the EU demanded additional guarantees on deforestation and labor rights from the South American countries amid concerns that the deal would encourage Mercosur farmers to clear Amazon forests to plant soybeans or graze cattle to sell to the bloc. There are also concerns within the EU regarding the effect the agreement will have on European farmers when cheaper imports from Mercosur come flowing to the market.

Mercosur is currently working on a counterproposal to the EU’s environmental demands that it plans to submit to the EU within the coming weeks, a senior Brazilian diplomat told the Financial Times last week.

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