Chapter 1: The Stalemate in Trade Negotiations

The current trade discussions between the European Union (EU) and Mercosur, a South American trade bloc, revolve mainly around two nations: Brazil and France.

Recently, Brazilian President Lula has voiced his discontent with the dining experiences during his official visits to France and Italy, particularly criticizing the modest serving sizes and the absence of self-service buffets. While his comments may lack diplomatic finesse, it's understandable given his broader frustrations with Europe, especially France.

Since the early 2000s, the EU and Mercosur have endeavored to finalize a trade agreement. Historically, the EU has aimed to export industrial goods such as cars and chemicals into Mercosur, which has imposed high tariffs to protect its less efficient local industries. Conversely, Mercosur seeks access for its agricultural products in Europe but faces substantial resistance from inefficient farms supported by the EU's Common Agricultural Policy.

Currently, trade between the two entities is minimal, constituting around 2% of Mercosur's GDP and only 0.5% of the EU's. The proposed agreement aims to eliminate over 90% of tariffs, which could have significant implications for both parties, provided it receives ratification. Although signed in 2019, the deal remains unratified, despite being favored by the leading economies within each bloc, specifically Brazil and Germany. The primary obstacle? France.

France has consistently maintained a protectionist approach, striving to safeguard traditional sectors like agriculture and fishing. As a result, it has benefitted from EU agricultural subsidies and has actively opposed expanding agricultural markets within the bloc.

The tension deepened during the Bolsonaro administration in Brazil, characterized by a turbulent relationship with French President Macron. Bolsonaro’s comments, which included derogatory remarks about Macron's wife, and accusations of colonialism, only exacerbated matters. This discord was ignited by Macron's proposal for a G7 summit to address the alarming increase in Amazon rainforest fires, which saw a 77% rise during that year's dry season.

While similar fires were also reported in Bolivia, Paraguay, and Peru, international scrutiny predominantly targeted Bolsonaro, who has been criticized for promoting logging and cattle ranching practices that contribute to Amazon deforestation.

The environmental implications have provided France with a compelling rationale to resist ratifying the trade deal. The EU is eager to move forward with the agreement, not only as a means of facilitating necessary reforms to its agricultural subsidy system but also to reflect its commitment to sustainability—an increasingly pivotal issue in contemporary European politics.

France, now framed as the protector of environmental interests, can argue that the proposed trade agreement contradicts the principles of the European Green Deal introduced in 2020. Additionally, Sweden, currently holding the EU council presidency, has been a strong proponent of free trade and this particular deal. Spain, set to take over the presidency soon, also supports the agreement, likely due to strong cultural and linguistic ties to Latin America.

However, following Spain, Belgium, which is known for its opposition to the deal, will assume the presidency, followed by Hungary and Poland, both of which have contentious relationships with the EU establishment and could derail negotiations. France understands that delaying the deal could mean years before another serious attempt is made to finalize it.

There was optimism that Lula's election, which included promises to tackle deforestation, might prompt France to engage in negotiations. Indeed, some progress was noted shortly after his election, but Lula has since struggled to combat deforestation effectively. The reality is that Brazil's ability to manage this issue may be limited, as commodity prices for products like beef and palm oil often drive deforestation more than political promises.

For now, France enjoys a temporary reprieve, which is advantageous for Macron, especially given the strong opposition to the deal from major political parties and influential business interests. Should the agreement proceed, it could potentially alienate voters who lean towards Eurosceptic and anti-immigrant parties, such as the National Rally.

Macron has assured farmers that he does not intend to compromise local agricultural interests by allowing an influx of Brazilian and Argentine beef, which is often perceived as inferior quality.

However, some EU diplomats believe that France's stance may be shifting slightly, possibly because Macron's desire to maintain a neutral position between the US and China could benefit from stronger ties with Latin America. As food and fuel prices in Europe rise, forming a partnership with a region rich in these resources becomes increasingly attractive. Moreover, there is a recognition of Europe's historical and cultural connections with Latin America.

Macron possesses considerable power within the French political framework, and as he is unable to run for re-election, he might be in a position to overlook public dissent and pursue the trade deal if his perspective changes, similar to his approach to pension reforms. For the time being, however, it appears he remains opposed.

While France’s opposition is the most vocal, it is not the only one. Smaller countries like Ireland and Austria also express concerns, and even Argentina and Brazil, representing 90% of Mercosur's economic output, have sought modifications.

Polls show a significant majority of the EU public disapproves of the agreement, according to surveys conducted by environmental NGOs and consumer advocacy groups. The EU does not require unanimous consent for the trade-specific components of the agreement, and former World Trade Organization chief Pascal Lamy has suggested that the EU Council could proceed with a majority vote. Whether this will happen, and whether EU institutions will dare to push through such an unpopular initiative, remains uncertain.

The first video explores the underlying tensions between the European Union and Latin America, highlighting the complexities of their relationship.

The second video examines China's growing influence in Latin America, discussing its implications for international trade dynamics.