Despite France’s concerns about an EU-Mercosur deal, European Commission President Jean-Claude Juncker insisted on Friday (20 October) on reaching an agreement by the end of this year because it is “the most important” trade deal for Europe.

Juncker told reporters at the end of a two-day EU summit that “we will do everything we can” to conclude an agreement with Mercosur (Argentina,  Brasil, Uruguay, Paraguay) by the end of 2017.

He complained that the importance of Mercosur is “often underestimated”.

“Arguably, it is the most important trade agreement in terms of value”, Juncker stressed.

It represents eight times the size of the highly celebrated trade agreement signed with Canada (CETA), and four times the volume of the deal with Japan.

Juncker defended the ongoing negotiations with the Latin American bloc after French President Emmanuel Macron expressed some concerns during the leaders’ dinner on Thursday evening.

Reciprocity

Speaking to journalist after the summit, Macron stressed the need for including a “genuine principle of reciprocity” in EU’s trade policy.

In light of the increasing US isolationism since Donald Trump became president, Macron and Juncker agreed that the EU needs to react positively to the regions knocking on its door to open trade deals.

The Commission president reassured his French counterpart that the union will pursue reciprocity in the trade relations and will ensure full respect to EU standards.

“I will make sure that our environmental standards are stronger and more stringent,” Macron said.

Mercosur and the EU open talks two decades ago but the negotiations stalled until both sides made a new attempt in 2010.

But the process progressed at a slow pace as some European countries opposed relaxing the tariffs to certain products, as is the case for France and Ireland with Brazilian and Argentinian beef.

In order to break the deadlock, the Commission made an offer to Mercosur countries last year, including beef and ethanol, with a tariff-free 78,000-tonne annual allotment of beef.

If both sides fail to reach an agreement by the end of this year, EU negotiators warned that the whole agreement could be at stake.

Make it happen

The Commission acknowledged that the stakes are very high.

“We shall make it work”, summarised an EU source, referring to the volume involved in the “mega-deal”

Although the leaders barely discussed the EU-Mercosur talks, Spanish Prime Minister, Mariano Rajoy, one of the staunch defenders of the deal, also said it was a priority to conclude a deal.

“Trade agreements are a fundamental tool”, he said. That is why “Spain defends ambitious agreements that spread EU standards”.

For Nicolas Albertoni, a professor at the Catholic University of Uruguay and expert on EU-Mercosur talks, the upcoming rounds will not be easy because there was no clear  consensus on either side.

“Argentina, Uruguay and Paraguay seem to be aligned in concluding the deal as soon as possible. But it is not so clear that Brasil shares the same position,” he said.

There are also some tensions in the Mercosur area that could undermine the negotiations.

Last week Brasil threatened Uruguay with blocking dairy products.

“Following 20 years of talks, and against the backdrop of the changes in the global economy, if both sides don’t conclude this agreement by the end of this year, a lot of the trust will be lost”, he said.

In that case, Albertoni said, both sides should come up with a new strategy. One option would be a two-speed negotiation “as long as the EU and Mercosur set a clear calendar to cut their tariffs”.