EU-Mercosur deal: baton pass to Milei administration likely

Expectations for a final deal before the new administration are lowered as Argentine negotiators cancel a trip to Brasilia and President Alberto Fernández cites ‘great resistance from Europe’

The European Union and Mercosur will not be able to close their free trade negotiations next week because Argentina’s incoming government has to approve the outstanding issues, Brazilian officials and diplomats said on Saturday.

“Given the transition in Argentina, we are handing the subject to the new government, which has indicated they want a deal,” the Brazilian foreign ministry spokesman said.

The final agreement was planned to be announced on December 7 at the annual Mercosur presidential summit. However, in an interview with Futurock radio station on Sunday, Argentine President Alberto Fernández suggested that won’t be the case.

“We want to sign it because we think that an agreement between the EU and Argentina is correct in geopolitical terms,” the president said. “But we want to have certain conditions that will allow us to maintain our industries and lithium development, and make them grow.”

The treaty has not been signed yet “not because Argentina didn’t want to, but because there is great resistance from Europe,” Fernández said. “Two days ago, [French President Emmanuel] Macron said the agreement was unsignable and as the French president it’s not a position you can ignore.”

On Saturday, Macron said he is against the EU-Mercosur free trade treaty because “it doesn’t take biodiversity into account” and it boils down to a “badly patched” agreement.

“I am against the Mercosur-EU treaty because I think it is completely contradictory with what [Brazilian President Lula Da Silva] is doing in Brazil and with what [the EU] is doing” in terms of environmental policies, Macron said after meeting with Da Silva in Dubai at the United Nation’s 28th Conference of the Parties (COP 28).

“This is an agreement negotiated 20 years ago, and that we tried to patch up, but it is badly designed,” Macron said. He is set to travel to Brazil in March to discuss the treaty with Da Silva — the Brazilian president hinted on Sunday in an interview that if the agreement falls through, Macron would be the one responsible.

“I want to discuss something that is useful for Argentina,” said Fernández. “We, as a region, have asked something from the EU, but they want to give us a 10th of what we asked for.”

Argentine negotiators who were due to travel to Brasilia for a final push to close the deal canceled their trip, a Brazilian government trade official told Reuters. Another Brazilian official confirmed the announcement won’t be made on December 7. Both sources asked not to be named to speak freely.

Brazil, which holds the revolving presidency of Mercosur until next week, had hoped that the meetings this week would resolve final differences in time for the summit.

President-elect Javier Milei’s administration is expected to support the deal with the EU, although he has criticized it in the past. On Thursday, Argentina’s incoming foreign minister, Diana Mondino, said it was important to sign the EU-Mercosur accord after she visited Brasilia last Sunday to meet Brazil’s foreign minister.

Mondino spoke at the Argentine Industrial Union’s 29th annual conference where she highlighted the benefits of a potential Mercosur-European Union agreement and the “monumental” trade opportunities it could create for Argentina.

“We would be grateful if outgoing president Alberto Fernández could finish the deal between Mercosur and the European Union,” she said.

A trade treaty was agreed in principle in 2019 after two decades of talks, but additional environmental commitments demanded by the EU led Brazil and Argentina to seek new concessions that prolonged negotiations.

Given the lowered expectations for the December 7 summit and the fact that Milei will be sworn in as president three days later, an imminent conclusion does not seem likely.

“The outgoing government clearly did not want to give Milei a free pass,” a senior diplomat with knowledge of the negotiations told Reuters.



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