Italy puts EU-Mercosur trade deal on hold, casting doubt on future

By Philip Blenkinsop and Lisandra Paraguassu

BRUSSELS/BRASILIA, Dec 18 (Reuters) – Italian Prime Minister Giorgia Meloni asked Brazilian President Luiz Inacio Lula da Silva on Thursday for more time to back the contentious EU-Mercosur trade deal, casting doubt on the future of the EU’s trade expansion plans.

Lula told a press conference he had called Meloni to discuss the deal earlier in the day, and that she did not oppose the agreement but needed up to a month to win over farmers.

Lula, who warned on Wednesday he would not sign off on the deal if it was not concluded this month, said he would consult Mercosur partners at their summit on Saturday on next steps.    

Meloni said in a statement that Italy was ready to support the agreement once agricultural concerns were resolved, which she said could happen quickly.

Some 25 years in the making, the trade pact with Argentina, Brazil, Paraguay and Uruguay would be the EU’s largest in terms of tariff cuts. Germany, Spain and Nordic countries say it will boost exports hit by U.S. tariffs and reduce reliance on China by securing access to minerals.

But critics, including France and Italy, fear an influx of cheap commodities that could hurt European farmers. 

European Commission President Ursula von der Leyen had been expected to travel to Brazil on Saturday to sign the deal, concluded a year ago, but needed the backing of a broad majority of EU members to do so.

German Chancellor Friedrich Merz and Spanish Prime Minister Pedro Sanchez urged EU leaders on Thursday to back the pact.

“This trade agreement is the first of many that must come so that Europe gains geo-economic and geopolitical weight at a time when it is being questioned by clear adversaries, such as (Russian President Vladimir) Putin, or even by traditional allies,” Sanchez told reporters before an EU summit in Brussels.

The summit sparked an anti-deal protest by about 7,000 people, mostly farmers, which turned violent. Belgian police fired tear gas and water cannon after protesters hurled potatoes and rocks and smashed windows.

Poland and Hungary oppose the pact, while France and Italy remain nervous about increased imports of beef, sugar, poultry and other goods. The deal needs approval from EU governments, requiring a majority of 15 countries representing 65% of the bloc’s population. Italy’s stance is pivotal.

‘WE ARE NOT READY,’ SAYS MACRON

French President Emmanuel Macron, whose country is the EU’s largest agricultural producer, said the agreement was not ready.

“As we speak, we are not ready; the numbers do not add up to sign this agreement,” he said, adding France had been working with Poland, Belgium, Austria and Ireland to push for a delay.

In France, anger over the government’s handling of lumpy skin disease, a virus affecting cattle, has deepened farmer discontent over issues including the Mercosur pact. Farmers in the southwest have blocked highways for days. Wary of nationwide protests like those two years ago, Paris is rushing to vaccinate cattle while maintaining its opposition to the deal.

EU lawmakers and governments reached a provisional agreement on Wednesday on safeguards to cap imports of sensitive farm products such as beef and sugar and soften resistance. The European Commission is also preparing a declaration pledging aligned production standards.

Macron said reciprocity was essential so the EU did not open its markets to cheap imports produced under looser rules, such as pesticide use.

Some tractors that jammed Brussels streets carried banners echoing Macron’s scepticism: 

“Why import sugar from the other side of the world when we produce the best right here? Stop Mercosur,” read one sign.

(Reporting by Philip Blenkinsop, Inti Landauro, Benoit Van Overstraeten, Louise Breusch Rasmussen. Additional reporting Guz Trompiz in Paris and Angelo Amante in Rome. Editing by Andrew Cawthorne, Alexandra Hudson and Mark Potter)