EU makes move to rekindle Mercosur trade pact talks

European Union representatives have approached Brazil’s government seeking to rekindle negotiations with South America’s Mercosur bloc on a stalled trade agreement.

The contact comes amid rapid changes in global supply chains in the wake of the pandemic and the Ukraine war, which have increased Brazil’s influence as an agricultural powerhouse, according to a Brazilian official who spoke anonymously as the conversations are private.

Since 2021, the EU has proposed a side letter to the accord to include guarantees on the environment, concerns set off by rising deforestation in the Amazon that have been blamed internationally on President Jair Bolsonaro’s government.

This addendum, however, has yet to be drawn up.

Two weeks ago, officials in the Brazilian ministries of Economy and Foreign Affairs held a preliminary conversation with EU emissaries, and a new meeting is scheduled to take place at the end of September to outline further talks, the source said.

“This discussion was buried. They returned to discuss the agreement between Mercosur and the European Union precisely because they need agricultural, mineral and energy commodities. They can no longer count on Russia, there is the problem of supply chain disruption, excessive dependence on Asia,” said the source.

A European diplomat confirmed the resumption of contacts to get a new round of talks going on the Mercosur deal, which has taken two decades to negotiate and would create the world’s largest free market in terms of population.

According to the Brazilian source, the Europeans are interested in internalizing the agreement and the two sides of the table will now discuss the terms, with the side letter on environmental preservation expected by the end of this year.

Negotiations of the trade pact between the EU and the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay were completed in 2019, but the environmental concerns brought resistance to approval of the deal by the legislatures of the 26 EU member states.

The attempt to resume talks comes two months ahead of elections in which Bolsonaro trails former leftist President Luiz Inácio Lula da Silva, who favours reopening negotiations to add provisions on the environment but also human rights and technology transfer.

Bolsonaro’s aides say the agreement should not be reopened.

Last month, European Member of Parliament Anna Cavazzini and two other MEPs of the Greens/EFA political group visited Brazil to evaluate the threat to the Amazon from illegal gold mining and logging that has surged under Bolsonaro. She told Reuters environmental concerns meant there was no way the trade deal would pass with Bolsonaro in office.

France, the EU’s biggest agricultural producer, is one of the most vocal opponents of the agreement and said last year there was no chance of ratifying it.

Data shows deforestation in the Amazon rainforest in Brazil hit a record in the first seven months of this year, as the country heads into the worst period of the annual burning season.

For the Brazilian government, the environmental issue has been used as a pretext to delay the pact for protectionist reasons, with opposition coming mostly from major farming states.

Tags: South America, Market, agricultural, Trade Agreement, negotiations, Mercosur, global supply chains, Ukraine, Brazil, European Union