EU-Mercosur agreement faces a crossroads in Brazil’s presidential election

The Jair Bolsonaro administration can claim few diplomatic achievements for Brazil, but one of them is undoubtedly concluding the two-decades-long negotiations for a free-trade agreement between Mercosur — a trade alliance between Brazil, Argentina, Paraguay, and Uruguay — and the European Union.

However, since being signed in 2019, the deal has stalled. European countries opposed to some of the provisions have slammed the brakes on ratification, citing Brazil’s poor enforcement of environmental protection policies.

The upcoming presidential elections in Mercosur’s largest economy throw further uncertainty into the mix. The frontrunner, former President Luiz Inácio Lula da Silva, has been ambivalent as to where an administration he leads would stand on the Mercosur-EU deal.

“It would not mean starting from scratch. But certainly for us, I think areas such as government procurement, services, intellectual property, deserve an in-depth review,” former Foreign Minister Celso Amorim, now a foreign policy advisor to Lula, told Reuters.

Mr. Amorim and Lula were, however, less emphatic in an August 5 meeting with EU diplomats. “Celso Amorim stated that they do not want to renegotiate at this stage, although they would like some changes,” one source told The Brazilian Report.

By “changes,” they mean revisiting a provision that will allow EU firms to bid for public contracts on equal terms with domestic companies, this source says. 

Mercosur’s public procurement market is largely closed off to Europeans, as the South American...