the agreement with the European Union postponed again

Brazil hosted a Mercosur summit this Thursday, December 7, with the aim of signing a historic free trade agreement with the European Union. But given the irreconcilable demands of the two parties, it will at best be for later, explains this French business leader from São Paulo.

Signed in 2019, after more than 20 years of complex negotiations, the treaty provides for nothing less than the creation of the largest free trade zone on the planet, between the European Union on the one hand, Argentina, Brazil, Uruguay, Paraguay and soon Bolivia on the other hand, but it still has not been finalized.

Tensions emerged again this year, when the Europeans presented new requirements in terms of respect for the environment, combating deforestation in particular, accompanied by sanctions in the event of non-compliance. This failure is also due to the differences in standards for agriculture between this South American bloc and the EU, analyzes Bertrand Dupont, business manager in São Paulo and advisor to French people abroad:

“We have standards in France and in Europe for environmental conservation, regulation with the CAP of volumes produced, and use of pesticides, which are still much stricter in Europe than what we have in Mercosur. Moreover, just before COP 28, Brazil passed a law that facilitates the approval of new pesticides here.”

Unfair competition

Not to mention production costs in Brazil, which are much lower than in Europe, hence a feeling of unfair competition from French breeders in particular. The negotiators remain unsatisfied:

“Agricultural production capacities are limited worldwide, and South America, in particular Mercosur, have significant production capacities. And then it also opened up many opportunities for European and therefore French industrialists, with a reduction in taxes substantial, compared to emerging markets which have potential.”

The bridges are not yet broken. In their final communiqué this Thursday, Mercosur and the European Union wrote want to conclude “quickly” this trade agreement between the two blocs. No timeline details were provided.

A poorly patched agreement

In Europe, it is especially France and Ireland which are slowing down. Just a few days ago, Brasilia hoped to be able to announce an outcome at the summit. But persistent blockages have dampened this hope. Lula pointed at the “lack of flexibility” Europeans, criticizing in particular the “protectionism” from France.

In Brazil, theThe matter is in any case a subject of discussion, assures Bertrand Dupont: “There is a common respect. It would make it possible to open Mercosur markets a little more to Europe, and to diversify a dependence on China which is still very important today. So, we talk about it a lot here .”

Shortly after a meeting with his Brazilian counterpart in Dubai, on the sidelines of COP28, Emmanuel Macron judged the current draft agreement “badly patched”believing that he “did not take into account biodiversity and climate”. But all is apparently not lost, the tenant of the Élysée has planned a trip to Brazil next March to continue negotiating this agreement.

Beyond the differences on the content of an agreement, another factor has strongly contributed to further delaying the outcome of the negotiations: the recent election in Argentina of the ultraliberal Javier Milei, who is to be inaugurated this Sunday.

Go further

Mercosur official website

Bertrand Dupont’s consulting company in Brazil, “Otimiza Brasil”

Find this column on the site, the app, and in the international mobility magazine “Journal des Français à l’enseignement.fr”