EUMercosur

Brazilian president says it is now or never after Italy joins France in saying it is not ready to sign trade deal.

Brazilian President Luiz Inacio Lula da Silva has warned he may abandon a long-awaited trade deal between members of the South American bloc Mercosur and the European Union after key countries sought a delay.

The Brazilian leader issued the threat on Wednesday after Italy joined fellow heavyweight France in saying it was not ready to commit to the pact to create the world’s biggest free-trade area.

The EU had expected its 27 member states to approve the deal in time for European Commission President Ursula von der Leyen to fly to Brazil to sign an agreement with the host, along with Mercosur partners Argentina, Paraguay and Uruguay, on Saturday.

“I’ve already warned them: If we don’t do it now, Brazil won’t make any more agreements while I’m president,” Lula told a cabinet meeting.

“We have given in on everything that diplomacy could reasonably concede.”

‘Premature’ to sign: Meloni

The deal, more than two decades in the making, has been keenly backed by economic powerhouse Germany, along with Spain and the Nordic countries, amid rising Chinese competition and recent United States tariffs, which have increased the incentive to diversify trade.

It would allow the EU to export more vehicles, machinery, spirits and wine to Latin America, and more beef, sugar, rice, honey and soya beans to flow in the opposite direction.

France, eager to protect its agriculture industry, had already called for a delay on a vote to approve the deal, and gained the support necessary to potentially block the agreement when Italian Prime Minister Giorgia Meloni said on Wednesday that Rome was also not ready.

“It would be premature to sign the deal in the coming days,” she told parliament, saying that some of the safeguards Italy is seeking on behalf of farmers were yet to be finalised.

She said Italy did not seek to block the deal altogether, and was “very confident” that her government’s concerns would have been addressed to allow it to be signed early next year,

French President Emmanuel Macron told a cabinet meeting on Wednesday that his government would “firmly oppose” any attempts to force through the deal.

Hungary and Poland are also lukewarm on the agreement.

By contrast, German Chancellor Friedrich Merz said Wednesday he would push “intensively” for the bloc to approve the deal by the year’s end, in what he described as a test of the EU’s “ability to act”.

EU reaches agreement on agricultural safeguards

In an effort to allay some of the concerns, the EU struck a provisional deal on Wednesday to set tighter controls on imports of farm products, amid a background of farmer protests against the deal.

It determined the trigger for launching an investigation into such imports if import volumes rose by more than 8 percent per year or prices fell by that amount in one or more EU members.

EU leaders will discuss the matter at a Brussels summit on Thursday, a commission spokesman said.

Paris says EU member states cannot vote on the trade agreement in its current state.

France has urged the European Union to postpone a vote on a trade deal with the South American bloc Mercosur, saying conditions are not yet in place for an agreement.

In a statement from Prime Minister Sebastien Lecornu’s office on Sunday, Paris said that EU member states cannot vote on the trade agreement in its current state.

“France asks that the deadlines be pushed back to continue work on getting the legitimate measures of protection for our European agriculture,” the statement added.

European Commission President Ursula von der Leyen is due to visit Brazil on Monday to finalise the landmark trade pact, which the 27-member union has been negotiating with the Mercosur trade bloc for more than 20 years. The agreement is being negotiated with four Mercosur members: Argentina, Brazil, Paraguay and Uruguay.

But the Commission first has to get the approval of the EU member states before signing any trade deal, and Paris has made its objection to the deal with the Mercosur countries clear.

“Given a Mercosur summit is announced for December 20, it is clear in this context that the conditions have not been met for any vote [by states] on authorising the signing of the agreement,” the statement from Paris said.

Earlier on Sunday, in an interview with the German financial daily Handelsblatt, French Minister of the Economy and Finance Roland Lescure also said that the treaty as it stands, “is simply not acceptable”.

He added that securing robust and effective safeguard clauses was one of the three key conditions France set before giving its blessing to the agreement.

He said the other key points were ensuring that the same production standards that EU farmers face are implemented and proper “import controls” are established.

Farmers in France and some other European countries say the deal will create unfair competition due to less stringent standards, which they fear could destabilise already fragile European food sectors.

“Until we have obtained assurances on these three points, France will not accept the agreement,” said Lescure.

European nations are expected to vote on the trade pact between Tuesday and Friday, according to EU sources.

The European Parliament will also vote on Tuesday on safeguards to reassure farmers, particularly those in France, who are fiercely opposed to the treaty.

The EU is Mercosur’s second-largest trading partner in goods, with exports of 57 billion euros ($67bn) in 2024, according to the European Commission.

The EU is also the biggest foreign investor in Mercosur, with a stock of 390 billion euros ($458bn) in 2023.

If a trade deal is approved later this month, the EU-Mercosur agreement could create a common market of 722 million people.