Brazil's Optimism with Mercosur-European Union Agreement

Marcia Carmo (247) - President Luiz Inácio Lula da Silva will attend the Mercosur summit in Montevideo, Uruguay, scheduled for this Thursday and Friday. Lula approaches the meeting with optimism regarding progress in the free trade agreement negotiations between the bloc and the European Union. “Our expectation is positive,” one negotiator told Brazil 247.

The agreement has been under discussion since 1999. The world was different back then – Trump had not been re-elected to the White House, Milei was not Argentina's president, and China did not hold the global presence it does today. New developments include Panama’s interest in joining Mercosur and the presence of Uruguay's president-elect Yamandú Orsi, from the Frente Amplia, who met Lula in Brasília shortly after his election. Both Orsi and Panamanian President José Raúl Mulino confirmed their attendance at this Mercosur summit.

Last week, technical meetings between Mercosur and European Union representatives were held at Itamaraty. According to sources involved, “there are reasons for Brazilian optimism.” The Montevideo meeting will be the bloc’s first since last week’s negotiations in Brasília. The European Commission, led by President Ursula von der Leyen, holds the mandate to negotiate the agreement and supports its advancement. Von der Leyen participated in the G20 meeting in Rio de Janeiro, led by President Lula. However, any agreement must be approved by the European Council (27 heads of state and government) and the European Parliament. France remains strongly opposed, but Brazilian negotiators believe the agreement could open EU markets to Brazilian agribusiness without harming the country’s industry.

At the summit in Montevideo, Milei is expected to reiterate his support for the free trade agreement while advocating for greater Mercosur trade openness. For now, he does not intend to leave the bloc, particularly given Argentina’s dependence on Brazil and China as its main trading partners. Despite Milei’s enthusiasm for Trump’s election, Argentina’s struggling economy in Milei’s first year in office has led to a 20% drop in Brazil’s exports to Mercosur. The economic “chainsaw” Milei is wielding has reduced consumption, affecting Brazilian sales in the Argentine market.