Brazil on Tuesday took over the rotational presidency of Mercosur, a trade alliance also including Argentina, Uruguay, and Paraguay.
In his remarks to other member states, Brazilian President Luiz Inácio Lula da Silva adopted a strong tone when addressing the ongoing negotiations between Mercosur and the European Union for a trade deal. While the two sides reached an agreement in principle in 2019, the deal has yet to be signed.
Under Lula’s leadership, Brazil — Mercosur’s biggest economy — has taken issue with both a provision allowing European companies to participate in public tenders in Mercosur countries and a side letter presented by the EU earlier this year with additional environmental demands.
These new demands would require voluntary environmental commitments made under the 2015 Paris Agreement to be enforced by sanctions. Lula on Tuesday again called the side letter “unacceptable.” He added: “Strategic partners do not negotiate based on mistrust and threats of sanctions.”
The Brazilian government has criticized the EU’s environmental stance, which it sees as a cover for protectionist moves to cater to agricultural lobbies in countries such as France and Ireland.
“It is imperative that Mercosur presents a rapid and pointed response” to the side letter, Lula said.
A month ago, Lula and European Commission President Ursula von der Leyen said they both hoped to take the free-trade agreement over the hump by the end of the year — a timetable that seems more and more elusive.
Nods to Uruguay
Lula also pledged to advance negotiations with Canada, South Korea, and Singapore and “explore new negotiation fronts with partners such as China, Indonesia, Vietnam, and Central American and Caribbean countries.”
This is a nod to Uruguay, a tiny Mercosur member which has grown restless over what it sees as the bloc’s “immobility” around trade issues.
President Luis Lacalle Pou of Uruguay has gone so far as to threaten to sign deals outside Mercosur, violating the trade bloc’s most basic rule, if the organization fails to show signs of liberalization. His government has already opened trade talks with China.
Earlier this year, during a bilateral meeting with Lula, he said: “We belong to Mercosur, but we want it to be modern, flexible, and open to the world.”
During Tuesday’s summit, the Brazilian president said “only unity between Mercosur, South America, and Latin America will allow us to regain growth, fight inequality, promote inclusion, deepen democracy, and defend our interests in a world in transformation.”
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