EU and South American trade bloc reach giant trade deal after 25 years of negotiations

MONTEVIDEO, Uruguay — THE European Union concluded a blockbuster free trade deal with Brazil, Argentina and the three other South American countries in the Mercosur trade alliance on Friday, capping a quarter century of intermittent negotiations even as France promised to derail the controversial agreement.

If ratified, the deal would create one of the world’s largest free trade zones, covering a market of 780 million people that accounts for nearly a quarter of global gross domestic product.

Supporters of the deal in Brussels say it would save businesses some $4.26 billion in tariffs each year, by cutting red tape and removing tariffs on products like wine Italian, Argentinian steak, Brazilian oranges and German Volkswagens.

Critics in France, the Netherlands and other countries with large dairy and beef industries say the deal would subject local farmers to unfair competition and cause environmental damage.

From Uruguay, host country of the Mercosur summit, The President of the European Commission, Ursula von der Leyen hailed the deal as a “truly historic step” at a time when global protectionism is on the rise.

“I know that strong winds are blowing in the opposite direction, towards isolation and fragmentation, but this agreement is our clear response,” von der Leyen said, an apparent reference to US President-elect Donald Trump’s vows to protect the American workers and goods.

Under pressure from his country’s powerful and vocal agricultural lobby, French President Emmanuel Macron said Friday that the deal remained “unacceptable” as it stands and stressed that governments had not yet seen “the final result.” negotiations.

“The agreement has neither been signed nor ratified. This is not the end of the story,” Macron’s office said, adding that France demanded additional guarantees for farmers and commitments to sustainable development and health controls.

For France to block the deal, it would need the support of at least three other EU member states representing at least 35% of the bloc’s population.

The French government, which brought countries together to oppose the deal, cited Austria, Belgium, Italy, the Netherlands and Poland as other wary states sharing French concerns about the deal. ‘agreement.

To enter into force, the pact must also be approved by the European Parliament.

In remarks aimed at his “fellow Europeans”, and perhaps especially French skeptics, von der Leyen promised that the deal would boost 60,000 businesses through the deal. reduced ratesstreamlined customs procedures and preferential access to raw materials otherwise supplied by China.

“This will create enormous business opportunities,” von der Leyen said.

She then turned her attention to European farmers who fear an influx of cheap food imports could jeopardize their livelihoods. South American countries are not required to adhere to the same standards when it comes to animal treatment and pesticide use.

“We have heard you, listened to your concerns and we are acting accordingly,” von der Leyen said.

Outrage over environmental rules, rising costs and unregulated imports sparked massive farmer protests across the continent over the past year.

Leaders on both sides of the Atlantic who have long supported the deal welcomed the announcement Friday, hailing the results as a boon for export industries.

It is the first major trade agreement for Mercosur, which includes Argentina, Brazil, Uruguay, Paraguay and, most recently, Bolivia. The bloc had previously only managed to secure free trade deals with Egypt, Israel and Singapore.

“A significant obstacle to the deal has been overcome,” said Chancellor Olaf Scholz of Germany, whose country’s vaunted auto industry stands to benefit.

From Spain, Prime Minister Pedro Sánchez called the agreement an “unprecedented economic bridge.”

At the Mercosur summit in Montevideo, the capital of Uruguay, Brazilian President Luiz Inácio Lula da Silva welcomed “a modern and balanced text which recognizes the environmental credentials of Mercosur”.

“We are securing new markets for our exports and strengthening investment flows,” he said.

Brazil’s Trade and Investment Promotion Agency said it expects the deal to increase the country’s exports to Europe by $7 billion.

Libertarian President Javier Milei of Argentina described the deal as consistent with its free market principles. Argentines are keen to sell more beef and agricultural products to the EU.

The agreement is the result of 25 years of careful negotiationsdating back to the Mercosur summit in Rio de Janeiro in 1999. The talks failed on differences in economic prioritiesregulatory standards and agricultural policies. The rise of protectionist tendencies is also recurrent hopes shattered.

Momentum accelerated in 2016, when former President Trump imposed harsh tariffs on Europe. At the same time, pro-market governments came to power in South America’s largest economies, Brazil and Argentina, which had been closed for years.

In June 2019, negotiators announced an agreement that included provisions for tariff reductions and commitments to environmental standards.

But this was never implemented. In Brazil, the region’s economic powerhouse, the former President Jair Bolsonaro in Brazil, chaired record levels of deforestation in the Amazonurging EU governments to demand stricter sustainability criteria. In Argentina, a new left-wing protectionist government opposed the agreement.

But things improved as the region’s politics changed again in 2023. Brazilian President Lula came to power commits to curbing illegal loggingsoothing concerns that deal could accelerate deforestation. Argentina’s Milei is working to open up the country’s notoriously closed and crisis-ridden economy.

But if past EU trade deals are to be believed, ratification could take years.

“We celebrate it, but it’s still far from reality,” Milei said of the deal.

In 2016, the EU and Canada signed an agreement, known as the Comprehensive Economic and Trade Agreement, or CETA, but the approval process is still long.

The German parliament signed this agreement only two years ago, and the The French Senate rejected it in March this year.

“Anyone with any memory is skeptical,” said Brian Winter, vice president of the New York-based Council of the Americas. “They have presented leaders, declared victory and celebrated, and yet there always seems to be a hitch.”

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DeBre reported from Buenos Aires, Argentina. Associated Press writers Mauricio Savarese in São Paulo, David Biller in Rio de Janeiro, Lorne Cook in Brussels and Sylvie Corbet in Paris contributed to this report.