EU-Mercosur unlikely to be finalised before the EU elections

by Paul Messad

It is highly unlikely that the hotly-contested EU-Mercosur free trade agreement will be concluded before the EU elections in June, French and German MPs familiar with the matter told Euractiv France.

The beginning of February saw the latest round of negotiations on the long-delayed free trade agreement between the EU and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) once again fail.

Rules on reciprocity in environmental and social standards continue to be a sticking point, with France so far refusing to sign unless there are so-called ‘mirror clauses’ in place, which would ensure that Mercosur countries are bound by similar environmental commitments to those already required of EU countries.

With only a few months before the European elections in June, the failure of these latest negotiations could mean that no agreement will be reached before then.

“The ideal situation would have been to conclude all this [negotiations on the EU-Mercosur agreement] before the European elections. This is no longer possible,” Nils Schmid, German MP and foreign affairs spokesman for the Socialist Group in the Bundestag (SPD), told Euractiv France.

France is “in no hurry to reach a conclusion”, Pascal Lecamp, Mouvement democrate (Modem) MP and sponsor of a resolution against the agreement in its current form, told Euractiv France.

Over two decades of negotiations

The agreement has already been 25 years in the making.

Launched in 1999, the negotiations between the EU and the Mercosur states aimed to create the world’s largest free trade agreement, allowing trade between more than 780 million people with reduced tariffs on goods and services currently worth €120 billion a year.

Negotiators reached an agreement in 2019, though France subsequently refused to support the deal, arguing that the environmental and social guarantees offered by Brazil’s far-right then-president, Jair Bolsonaro, were insufficient.

Discussions, therefore, stalled until the return of Brazil’s current socialist president, Lula, who rekindled hopes of a swift signature at the end of 2022.

However, talks remain stuck on the inclusion of ‘mirror clauses’.

The European Commission, which has exclusive competence for the commercial aspects of free trade agreements, has proposed the inclusion of a so-called additional protocol containing social and environmental clauses.

However, this is non-binding and therefore deemed insufficient for EU countries opposed to the agreement, while Mercosur countries have accused the EU of interfering in their internal affairs.

Though the latest round of negotiations, held in late January and early February, failed – with France’s defiance in part fuelled by widespread farmers’ protests across the bloc – the Commission said talks have already resumed.

“The work continues”

“The work continues,” European Commission executive vice-president in charge of trade Valdis Dombrovskis said on 8 February.

“Dombrovskis was, is and will remain ready to travel to Mercosur if technical negotiations have progressed sufficiently far for a political agreement to be within reach,” a Commission spokesperson told Euractiv France.

“Currently that is not the case. […] the Commission’s assessment is that the conditions to conclude the Mercosur negotiations are not met yet,” the spokesperson said, echoing the sentiment of Green Deal Commissioner Maros Sefcovic on 7 February.

So far, that has also been the position held by France, Austria, the Netherlands and Belgium, while Spain, which was in favour of the agreement as it stands, now wants it to include mirror clauses.

Lost time

While the French are in the camp that is standing firm against a quick conclusion of the deal, some on the German side are lamenting the lack of pace.

“We’ve lost a lot of time, and we’re quite disappointed in Germany,” SPD MP Schmid told Euractiv France.

Schmid, who is also the co-president of the Franco-German Parliamentary Assembly, pointed out that a revitalised international trade policy was one of the key points of German Chancellor Olaf Scholz’s programme.

“Germany is a country that is very committed to free trade,” were the words that Scholz used on 5 February in Berlin, standing alongside Prime Minister Gabriel Attal, Schmid pointed out.

However, as things stand, “there will be no agreement between France and Germany on the EU-Mercosur agreement before the European elections,” said Schmid.

MoDem MP Lecamp concurred, telling Euractiv France that this is indeed “unlikely”.

“Today, the agreement is not a priority for Europeans. Rather, they are waiting for progress on immigration, artificial intelligence and budgetary rules,” Lecamp added.

Following the farmers’ protests, agricultural policy issues have also been pushed to the top of the political agenda.

“We have to get through this phase of the [European] elections and the intrusion of the agricultural issue into the French political landscape. After that, we will have to see if we can find clauses to cushion the shock that French farmers fear,” concluded Schmid.

*first published in: Euractiv.com