Berliner Boersenzeitung - EU's Mercosur trade deal hits French, Italian roadblock

Twenty years in the making, the pact to create the world's biggest free-trade area is backed by Germany and many of the European Union's 27 nations, keen to diversify trade in the face of US tariffs.

The deal would allow the EU to export more vehicles, machinery, wines and spirits to Latin America, while facilitating the entry of South American beef, sugar, rice, honey and soybeans into Europe.

Fearing negative fallout for its agricultural sector, France has long been a holdout, but had failed to muster enough support to block the accord -- until now.

With just days to go, Italian Prime Minister Giorgia Meloni broke cover on Wednesday and said Rome was not ready.

"It would be premature to sign the deal in the coming days," she told parliament, arguing that some of the safeguards Italy wants to protect its farmers were still to be finalised.

The European Commission was expecting member states to give the deal their approval in time for EU chief Ursula von der Leyen to fly to Brazil to sign the deal with Mercosur partners Saturday.

That is now in doubt, though a commission spokesman said EU leaders will discuss the matter at a summit in Brussels Thursday -- as thousands of farmers converge on the city in protest.

Talks "could get pretty heated", a European diplomat said, speaking on condition of anonymity.

Paris had already thrown a spanner in the works by calling this week for a delay to the vote, demanding robust safeguard clauses, tighter import controls and more stringent standards for Mercosur producers.

President Emmanuel Macron told a cabinet meeting Wednesday that France would "firmly oppose" the European Union forcing through the deal.

- 'Refundable ticket'? -

Key power Germany as well as Spain and the Nordic countries strongly support the Mercosur pact, eager to boost exports as Europe grapples with Chinese competition and a tariff-happy administration in the White House.

Spanish Agriculture Minister Luis Planas described the deal as "crucial" this week while the German government said its signing was "urgently necessary".

But with Hungary and Poland also averse, Meloni's move means critics would now have enough clout within the European Council to shoot down the deal, were it to be put to a vote.

The twist cast a cloud over von der Leyen's plans to join the leaders of Mercosur members Brazil, Argentina, Paraguay and Uruguay in Foz do Iguacu, home of the famed Iguacu waterfalls, for the signing.

"I hope she has a refundable ticket," jeered a second diplomat.

Meloni said Italy does not intend "to block or oppose the agreement as a whole" and was "very confident" the conditions would be met for Rome to sign at the start of 2026.

She said Italy has "worked intensively with the Commission" on its demands, including safeguard mechanisms, a fall-back compensation fund, and stronger pest and disease regulations.

But with those measures yet to be "fully finalised", she said, signing in the coming days was "still premature".

Brussels has insisted on getting the trade deal over the finish line by the end of the year -- calling it a matter of credibility with regard to the EU's South American partners.

Brazil's left-wing President Luiz Inacio Lula da Silva said Tuesday he still hoped it could be signed this weekend.

"I hope that my friend Macron and Italy's Prime Minister Meloni take responsibility," he said, adding he hoped the EU would be bringing "good news" to Foz do Iguacu.

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(T.Burkhard--BBZ)