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Brazilian President Luiz Inácio Lula da Silva has threatened to walk away from a successful trade deal with the EU after key countries asked Brussels to postpone the vote on approving the deal.
France and Italy have asked to postpone a vote scheduled for this week that would allow the EU to sign the pact with the Mercosur trading bloc of South American countries on Saturday, demanding additional guarantees to protect European agriculture.
“I have already warned them: if we don’t do it now, Brazil will not make any more deals as long as I am president,” Lula said at a ministerial meeting on Wednesday.
“We have been waiting for this agreement for 26 years. The agreement is more favorable to them than to us. [French President Emmanuel] Macron doesn’t want to do it because of his farmers, Italy doesn’t want to do it, I don’t know what reason,” he said.
“We have conceded everything that diplomacy could allow.”
EU officials said European Commission President Ursula von der Leyen planned to travel to Brasilia on Saturday to sign the deal.
Italy is demanding that Mercosur – which also includes Argentina, Uruguay and Paraguay – agree to new binding protections for EU farmers.
Two EU diplomats said Rome was pushing for an exchange of notes to recognize measures the EU would take if food imports hit the incomes of its producers.
“If we don’t sign this week, it will die,” said a third EU diplomat. “Latin Americans are getting tired of Europe.”
However, the diplomats said a compromise could be found at a summit in Brussels on Thursday.
Countries such as Germany and Spain are desperate for a deal to increase their exports of cars and machinery. But with Poland also opposing the deal, Italy – whose industrial sector strongly supports the deal – must reach the required majority for the deal.
In response to the opposition, the European Commission has proposed a legally binding formula that will dictate its response if farmers are harmed by cutting tariffs on beef, chicken and grains.
“Bilateral guarantees… to reassure farmers” should be “accepted by Mercosur through the exchange of banknotes,” one of the two EU diplomats said.
The European Parliament and the Member States were expected to finalize the security measures on Wednesday evening. They would force the commission to investigate whether imports would rise or prices fall in a single country, and possibly reimpose tariffs.
Italian Prime Minister Giorgia Meloni told parliament in Rome on Wednesday that signing the deal this week was “premature”.
She welcomed additional measures, including a compensation fund, increased border controls and increasing inspections of producers in exporting countries, but added: “All these measures, although presented, have not yet been fully completed.”
Maroš Šefčovič, EU Trade Commissioner, warned on Monday that delaying the approval vote could derail the deal, which would be the EU’s biggest ever.
“I think this is a question of the EU’s credibility and predictability,” he told the Financial Times.
“We often talk in Europe about the need to be strategic. A strategic decision has to be made.”
Benjamin Dousa, Sweden’s trade minister, told the FT in an interview that it is crucial to show that Europe is “open for business.” “Maybe we’re just on a sinking ship here, lagging behind both Asia and of course the US,” Dousa said.
An official in a Mercosur country said: “What is clear is that protectionism is alive and well within the EU.
“The concessions for the Mercosur agricultural sector were minimal, effectively small quotas, and yet at the last minute the protectionists are making additional demands on a deal struck a year ago.”
Former Paraguayan President Santiago Peña told the FT in September 2023 that Mercosur would walk away if the EU did not finalize the long-delayed treaty. The two sides finally reached an agreement a year ago.
Additional reporting by Laura Dubois in Brussels
