EU’s new trade deal with Mercosur draws fire from France over agricultural fears The block’s unity is at risk

Ursula Von der Leyen, President of the European Commission, has signed a new trade agreement with the leaders of the South American trade bloc Mercosur in Montevideo, Uruguay, marking a historic moment in international trade relations.

The deal between the European Union and the Mercosur bloc threatens to deepen divisions within the EU, as tensions rise between Paris, Brussels, and Berlin, Caliber.Az reports via Daily Express.

However, the deal has sparked strong opposition from France, which fears its domestic poultry and beef markets will be undercut by cheaper South American imports.

“Today marks a truly historic milestone,” said Von der Leyen after meeting with the leaders of Mercosur countries, including Argentina’s newly elected, long-haired president, Javier Milei.

The deal, years in the making, will establish new trade relationships between the EU and the Mercosur states—Brazil, Argentina, Uruguay, Paraguay, and the recently added Bolivia—encompassing a population of over 700 million people.

Despite the celebrations, the French government remains strongly opposed. French concerns centre on the potential impact on its agriculture, particularly the poultry and beef industries, which could face competition from cheaper South American goods.

On the other hand, Germany has expressed enthusiasm about the agreement, viewing it as an economic opportunity to boost exports. Siegfried Russwurm, head of the Federation of German Industry (BDI), praised the deal, stating: “This agreement will provide an urgently-needed growth impulse for the German and European economy.”

Under the agreement, trade barriers will be reduced between the EU and Mercosur, fostering greater economic cooperation between the two regions.

Von der Leyen framed the deal as both an economic and political necessity. 

“We are sending a clear and powerful message: In an increasingly confrontational world, we demonstrate that democracies can rely on each other. This agreement is not just an economic opportunity. It is a political necessity,” she underscored.

However, the deal’s final approval still depends on ratification by the EU member states. France has expressed hopes of persuading other sceptical nations, such as Poland, Ireland, and Austria, to oppose the deal. French Junior Trade Minister Sophie Primas emphasized, “France’s voice remains strong in Europe. No, we’re not alone in our opposition to Mercosur as it stands. We can achieve a blocking minority.”

To note, the EU-Mercosur trade deal, a major milestone in global commerce, aims to bolster economic ties between the European Union and Mercosur countries: Argentina, Brazil, Uruguay, Paraguay, and recently, Bolivia. This deal, which has been in the making for over 25 years, covers a market of over 700 million people.

For the EU, the deal pledges to lower trade barriers, increase exports, and open up new investment opportunities, especially for small and medium-sized enterprises. The EU is Mercosur’s largest trading partner, with goods exports valued at €56 billion in 2023, and services exports at €28 billion in 2022.

Mercosur, or the Southern Common Market, is a regional trade bloc in South America that includes Argentina, Brazil, Paraguay, and Uruguay as full members, with Bolivia's membership recently ratified. Additionally, several countries like Chile, Colombia, and Peru are associate members​Council on Foreign Relations. It was established in 1991 with the goal of creating a common market, eliminating trade barriers between member countries, and facilitating the free movement of goods, services, and people.

By Khagan Isayev