French President Emmanuel Macron‘s office has declared a draft agreement that was about to be signed between the European Union and the South American Mercosur bloc as “unacceptable“. The Elysee rejection came as European Commission President Ursula von der Leyen arrived in Uruguay where she was expected to sign off on the pact between the EU and the Mercosur bloc, which includes Brazil and Argentina, major exporters of agricultural products.
According to the Elysee statement, Macron informed von der Leyen that France was unable to accept the deal in its current form. Although supported by most South American countries and strongly backed by EU members Germany and Spain, the deal had faced strong opposition from the French, who feared their farming sector would lose out to cheaper agricultural imports.
More than two decades of negotiations had brought the EU and the Mercosur bloc of South American countries to the verge of finalising the free trade agreement when Macron’s office posted its objection to the pact on X. One way or another, full implementation would still have required overcoming not just resistance from France but that of other EU members as well.
The EU could speed ratification, provided the core trade deal is approved by a simple majority of EU lawmakers and by 15 member governments accounting for at least 65% of the EU population. To effectively block that, a minimum of four EU members representing more than 35% of the bloc’s population would have to oppose it.
France is expected to try to rally resistance, drawing on possible support from Austria, Poland and the Netherlands. Yet, since between them they account for around 30% of the EU population, the four would still need additional backing to effectively block the deal. The reality they face is that an alignment of Germany, Spain and nine other EU members, which account for some 40% of the EU population, have urged negotiators to reach a deal this year.
Full implementation of the wider political accord between the trade blocs, including new rules for cross-border investment, would likely require approval by national parliaments in the 27 EU member countries – a much longer process.
Mercosur’s founding four – Argentina, Brazil, Paraguay and Uruguay – are all eager to see the overall trade pact implemented. Leaders claim it would create a market of more than 700 million people. According to economists, the deal could end up eliminating as much as 4 billion euros of tariffs annually.
The accord would help Europe export more cars and manufactured goods, while securing access to minerals crucial to its energy transition. However, the fact that it would also reduce trade barriers for South American meat and grains led to objections from EU farming groups. EU member nations refused to ratify a version of the deal reached in 2019, citing environmental concerns following the election of former Brazilian President Jair Bolsonaro.
More recently, negotiations in Brasilia and Montevideo seemed to have assuaged some of these objections, leaving the way clear for a new deal.
