MercoPress. South Atlantic News Agency

France and Germany split over the EU–Mercosur trade pact

Macron doesn't want French farmers more furious; they've already brought the country to a standstill for weeks with their protests.

By Oliver Pieper - The free trade deal between the European Union and the South American trade bloc Mercosur could become the world's largest agreement, involving a market of a total of 780 million people. But in late March, French President Emmanuel Macron not only described it as “a very bad agreement,” he even suggested it should be “left behind” and called for “a new agreement.”

Macron likely doesn't want to give right-wing populist parties like Marine Le Pen's National Rally any free ammunition for their campaign ahead of the EU elections in June. And he doesn't want French farmers more furious; they've already brought the country to a standstill for weeks with their protests.

Weeks later, Macron's words still resonate. The agreement between the EU and Argentina, Brazil, Paraguay and Uruguay, which was actually finalized five years ago, is still on hold. History is repeating itself: France also blocked the agreement in 2019. Back then, it was in response to the far-right Brazilian president Jair Bolsonaro and his controversial policies in the Amazon rainforest.

Now, the French head of state is worried Argentina, Brazil and Uruguay may flood the European Union with cheap meat — and that French farmers will again take to the barricades. Meanwhile, German industry is pushing for the agreement to be concluded — if necessary by a qualified majority, even without France.

Major chemical companies, such as BASF and Bayer, as well as the automotive industry, including Daimler and Volkswagen, see the deal as a great business opportunity. “Volkswagen stands for an open, free, and rule-based trade policy, and is advocating for the swift ratification of the Mercosur agreement,” the auto giant told DW in a statement.

In Brussels, negotiators have remained notably calm, despite the delay. “The EU-Mercosur teams remain in contact on a technical level to resolve the outstanding issues,” said Olof Gill, a trade and agriculture spokesperson for the European Commission. “The EU continues to focus on ensuring that the agreement meets the EU's sustainability goals, while also taking the EU's farmers feelings and interests.”

And so we have yet another chapter in the seemingly endless story of the negotiations between the EU and Mercosur, which first began in 1999. The goal was to facilitate trade between the two continents in certain products, and to reduce tariffs.

It has been suggested the European Union could invest in green injury, for which there is much potential in South America. But Marcela Cristini, a senior economist at Argentina's Latin-American Research Economic Foundation, said the continued delay of the free-trade deal will hurt those ambitions, with China keeping a very close eye on the stalled talks.

Although Argentine President Javier Milei railed against China during his recent election campaign, saying he didn't want to do business with communist countries, Cristini is convinced China would respond if Argentina came calling. In fact, 21 Latin American and Caribbean countries are keen to be part of China's Belt and Road Initiative, a global trade and infrastructure project also known as the New Silk Road.

“The Mercosur countries are global traders, and China is one of the main buyers of agricultural and industrial products,” said Cristini. “That is not going to change. In the case of Mercosur, China is all of its members number One or Number Two trade partner.”

Meanwhile, France's Macron is the last hope for those who are fundamentally opposed to the free-trade agreement. Environmental and human rights organizations in Europe and South America have been fighting the plans for years. A brief remark by the French president, in which he suggested negotiating a new treaty that “takes into account development, climate and biodiversity” made them sit up and take note.

At the forefront of the opposition is German environmental lawyer Roda Verheyen. In a legal opinion commissioned by Greenpeace Germany, she concluded that the agreement violated international climate law.

“This agreement should no longer be negotiated, because it simply does not represent a modern and lawful free trade agreement, no matter what they add to it,” she said. “The EU-Mercosur agreement is quite simply outdated, and unsuitable, from today's perspective, for combining climate protection and global policy approaches.”

Verheyen has already argued successfully for greater climate protection in Germany, before the Federal Constitutional Court in Karlsruhe in 2021. She believes that, due to increased deforestation and rising greenhouse gas emissions, the Paris climate protection goal of limiting global warming to a maximum of 2, preferably 1.5, degrees Celsius (3.6 to 2.7 Fahrenheit) is moving out of reach. Instead, she said that, in today's world, free-trade agreements should focus primarily on the transfer and sharing of technologies.

“Like the agreement with New Zealand, for example, and smaller agreements, too, which focus on transformation in both directions,” she said, referring to the EU-New Zealand free-trade deal which entered into force earlier this month. “Our goal certainly cannot be to import agricultural products from abroad more cheaply, and, on the other hand, to export internal combustion engines abroad. That's just damaging for everyone.”