Argentina has thrown a wrench into the works of EU efforts to reach a Mercosur free-trade agreement next week.
Brazil told the EU that sealing the trade deal next week won’t be possible as the approval of Argentina’s incoming government will be required on outstanding issues such as a policy to curb deforestation, according to two officials close to the negotiations who were granted anonymity to discuss a sensitive topic.
The EU had hoped to finalize a trade agreement with the Mercosur countries — Brazil, Uruguay, Paraguay and Argentina — in time for a December 7 summit of South American leaders in Brazil.
But Argentina has notified Brazil, the current president of Mercosur, that it will not be able to make new commitments in the negotiations and that it intends to leave decisions to Javier Milei, an anarcho-capitalist outsider who won Argentina’s presidential election in November. The setback was first reported by CNN Brasil.
As a result of Argentina’s decision, a potential round of negotiations set for Rio de Janeiro during the Mercosur meeting was canceled, according to the CNN Brasil report. A visit by European Commission President Ursula von der Leyen to the Mercosur gathering on Thursday was also scrubbed, the report said.
Milei’s victory stunned many in the EU who fear that it spells further trouble for talks on what would be a landmark trade accord. During his presidential campaign, Milei threatened to quit Mercosur. Milei has called Mercosur a “phenomenal failure” and described it as a “customs union of poor quality that creates trade distortions and hurts its members.”
Von Der Leyen, who was with Brazil’s President Luiz Inácio Lula da Silva on Saturday at the COP28 climate conference in Dubai, maintained hope for an agreement.
“The EU and Mercosur are engaged in intense and constructive discussions with a view to finalizing a political, cooperation and trade agreement,” the European Commission said in a statement. “Substantial progress has been made in the past months,” it said.
“Negotiations will continue in a constructive spirit with an ambition to conclude as swiftly as possible,” the Commission said.
Brazil’s Lula is set to meet with German Chancellor Olaf Scholz on Monday in Berlin for bilateral consultations. Germany is a strong promoter of the Mercosur deal.