In fear of polls, the France – and by extension the EU- postpones for after the European elections a very promising one trade agreement with the Latin America.

It is obvious that the French president Emmanuel Macron does not want to offer even more pre-election “aces” to Marine Le Pen and the far-right Rassemblement National, which is already ahead in the polls, ahead of the European elections. Nor does he want to anger again the French farmers, who very recently and for many weeks had paralyzed the country, protesting against the increased cost of production and, in their view, unfair competition from third countries.

Consequently, it is postponed until further notice – and certainly until the European elections in June – free trade agreement between the “EU of 27” and the Mercosur zone, which includes some of the most dynamic markets in Latin America (Argentina, Brazil, Paraguay, Uruguay, Venezuela). In his recent statements in Brazil, President Macron said that “the current agreement is not good” and apparently “we will have to conclude a new agreement”.

Franco-German dispute

So history repeats itself. Negotiations for the world’s largest free trade area, which would create a market of 780 million consumers, began in 1999 and have been completed since 2019. That year it was again France that blocked the final implementation, citing the manipulations of the then of Brazil’s far-right president Jair Bolsonaro and the destruction of the Amazon forests.

Now the French president is expressing concerns that Latin Americans will flood Europe with cheap meat they produce, sparking fresh protests by farmers and ranchers in France. On the contrary, Germany is pushing for the rapid implementation of the agreement and is even considering the possibility of lobbying for the necessary enhanced majority, so that if necessary the agreement can be approved even without France’s consent.

Industrial giants such as BASF and Bayer, as well as automakers Daimler Benz and Volkswagen (VW), believe that the completion of the deal would offer new and important business opportunities. “VW is in favor of a free and open trade policy, which will be governed by specific rules and therefore supports the immediate ratification of the agreement with the Mercosur zone,” says a representative of the company, responding to a related question from DW.

The Commission seems to be in a relaxed mood despite the apparent delay. Olof Gill, the European Commission’s representative for trade and agricultural policy, tells DW that “EU negotiators are maintaining contacts at a technical level to settle issues, which remain open. The EU wants to ensure that the deal meets its sustainability criteria while taking into account its sensitivities in the agricultural sector.”

Key role of Argentina

At the end of 2023, when France was not faced with peasant mobilizations, it would perhaps be a good opportunity to implement the agreement. But Argentina’s then-president Alberto Fernandez did not want to preempt his potential successor, Javier Millay, the so-called “anarcho-capitalist,” who said he would leave the Mercosur group.

Now Millay has changed his mind and declares that he is co-signing the trade agreement with the EU. However, as France delays the final implementation, there are also growing voices in Argentina that speak of a “reexamination” of the terms of the agreement based on national interests. However, Marcela Cristini, chief economist of Argentina’s Foundation for Scientific Research (FIEL), tells DW that “the Millay government wants to implement reforms, open the country’s economy to trade and strengthen its international presence” and for him the reason has already concluded free trade agreements with Singapore on the one hand and with the European countries of the EFTA zone (Norway, Switzerland, Iceland, Liechtenstein) on the other.

Does China benefit?

Cristini warns that Europeans should not waste too much time because there is also an “elephant in the room” called “China” and is watching the developments with particular interest. Of course, Miley himself in the pre-election campaign had verbally attacked Beijing, saying that he refuses to “do business with communists”.

But China is consolidating its presence in the region. Already, 21 Latin American and Caribbean countries have declared their support for China’s initiative for a new “Silk Road”. Besides, the economist from Argentina points out, “China is already one of the largest markets for the agricultural and industrial products of the Mercosur zone. And if you look at each country separately, Beijing is the No. 1 or No. 2 trading partner.”

Edited by: Yiannis Papadimitriou