EU Struggles with Mercosur Trade Agreement

(Bloomberg) — Ursula von der Leyen was set to finalize the EU’s largest free-trade deal on Saturday, which would bolster the bloc’s status as a global economic player.

However, the President of the European Commission now faces the challenge of garnering last-minute backing from nations like Italy, which has expressed concerns regarding potential impacts on its agriculture sector, resulting in further delays in the Mercosur agreement.

The trade discussions involving Argentina, Brazil, Uruguay, and Paraguay have taken over 25 years, causing frustration among South American leaders. Brazilian President Luiz Inacio Lula da Silva remarked that it was a pivotal moment for the deal.

In a letter to Lula, von der Leyen and European Council President Antonio Costa expressed their regret for missing a self-imposed deadline of December 20 and indicated they are making earnest efforts to finalize the agreement.

Officials are aiming for a new signing attempt on January 12, although uncertainties remain. The failure to ratify the agreement poses a significant setback for the EU, which is eager to showcase its ability to establish itself as a major global player and diversify its economic partnerships, particularly away from the US and China.

Von der Leyen noted earlier this week that this is “Europe’s independence moment,” especially as EU leaders prepare to discuss funding options for Ukraine alongside the Mercosur deal.

Currently, Italy’s approval is critical. Prime Minister Giorgia Meloni has stated that she requires more time to secure domestic support. While some speculate that Italy will ultimately agree due to potential trade benefits, others remain cautious, warning that a failure to conclude this agreement could severely undermine the EU’s global trade credibility.