France presses pause on Mercosur-EU trade talks despite Macron's visit to Brazil

Negotiations over a trade agreement between the Mercosur trade bloc – comprising Argentina, Brazil, Paraguay and Uruguay – and the European Union have reached an impasse.

Key resistance to the deal is coming from France, despite the cordial relationship between the French and Brazilian governments.

French President Emmanuel Macron arrived in Brazil on March 26 for a three-day visit, where he met with government representatives and business leaders.

Macron traveled to various states with President Luiz Inácio Lula da Silva, announcing French investments of up to 1bn euros (US$1.1bn) in rainforest protection initiatives, along with cooperation on defense issues. However, there have been negative comments toward the trade deal from France's side.

Macron did not mention the agreement during the initial part of his visit and the president's office said before he traveled that the deal would not be on his agenda.

"We have to admit that Macron's visit to Brazil is a very friendly gesture from the French leader because he knows that Brazil would press him in an effort to advance with an agreement between the European Union and Mercosur. But even if he does approve an agreement, the French parliament would veto it, given the resistance and influence of the French agricultural sector, which fears competition from the South American agricultural sector," José Augusto de Castro, president of Brazilian exporters’ association AEB, told BNamericas.

Macron, meanwhile, said that adjustments have to be made to the agreement between the two trade blocs.

"The EU-Mercosur deal, as it is currently being negotiated, is a terrible agreement for us and for you," Macron said during a meeting with Brazilian business leaders, underlining that main points of the deal being negotiated were drawn up 20 years ago and many items need to be updated to include sustainability goals and climate change.

"France is currently the main point of resistance for an agreement and it's possible that, given this resistance, we will see space for some negotiations with other European countries that are interested in a trade agreement with Mercosur," said Castro.

The Mercosur-EU trade deal has been backed by Brazilian industrial leaders.

“We recognize some challenges that both Brazil and France face [regarding the agreement]. We're confident that, in the long term, the benefits of the integration of the two regions will overcome the initial adversities, providing significant gains for Brazil and France and for the other signatories of the agreement,” Ricardo Alban, president of Brazilian industries association CNI, told the business leader meeting.

Lula has been trying to convince his counterpart and allay concerns about the agreement in the French agricultural sector. However, Macron is opposed to any accord while South American producers do not follow the same environmental and health standards as EU producers, and European farmers pointed to concerns about pesticides in protests earlier this year.