The planned EU-Mercosur trade pact — two decades in negotiation — was thrown into doubt after Italy joined France in seeking a delay, provoking a sharp warning from Brazil's President Lula that he may halt future agreements. Ursula von der Leyen had been due to sign the deal in Foz do Iguaçu this weekend, but Rome says farmer safeguards remain incomplete. EU lawmakers secured temporary measures to suspend tariff preferences if imports surge, yet political opposition and upcoming shifts in Mercosur leadership could still derail the accord.
EU-Mercosur Trade Deal in Jeopardy as Italy Joins France — Brazil Threatens to Walk Away
French farmers have expressed their anger over the agreement in recent protests (ARNAUD FINISTRE)(ARNAUD FINISTRE/AFP/AFP)
Plans for a landmark EU-Mercosur trade agreement — nearly 20 years in the making — were thrown into uncertainty this week after Italy joined France in calling for a delay. The last-minute opposition prompted a stark warning from Brazil's President Luiz Inacio Lula da Silva, who said that if the pact is not concluded now, Brazil will not sign any further agreements while he is president.
"I've already warned them: if we don't do it now, Brazil won't make any more agreements while I'm president," Lula said at a cabinet meeting. "We have given in on everything that diplomacy could reasonably concede." His rebuke underscored how high the political stakes have become for Mercosur and the EU.
What the Deal Would Do
The agreement would create the world’s largest free-trade area and broaden market access: the EU would gain expanded export opportunities for vehicles, machinery, wines and spirits to South America, while Mercosur countries would see beef, sugar, rice, honey and soybeans enter European markets more easily. Supporters argue the pact helps diversify trade during growing global competition and shifting US trade policy.
Who Supports and Who Opposes
Key EU backers include Germany, Spain and several Nordic states, which view the deal as vital to boosting exports. German Chancellor Friedrich Merz said he would press "intensively" for approval before year-end and framed the vote as a test of the EU's ability to act.
France — citing the potential damage to its agricultural sector — has long demanded tougher safeguards and delayed a final vote. Italy's Prime Minister Giorgia Meloni surprised EU partners by saying Rome was not ready to sign, arguing that specific protections for Italian farmers remained unfinished. Hungary and Poland have also signalled scepticism, giving opponents enough weight in the European Council to potentially block a vote.
"It would be premature to sign the deal in the coming days," Prime Minister Giorgia Meloni told parliament, stressing that Italy did not intend to block the agreement permanently and expressed confidence conditions could be met for a 2026 signature.
Last-Minute Moves and Safeguards
Ursula von der Leyen had been due to fly to Foz do Iguaçu in Brazil this weekend to sign the deal, but that plan is now in doubt. To ease tensions, EU lawmakers and member states agreed on a package of temporary safeguard measures allowing the suspension of tariff preferences for sensitive goods in case of sudden import surges. Nonetheless, critics say more comprehensive controls and higher standards for Mercosur producers remain necessary.
The dispute will be discussed at a Brussels summit, where diplomats warned talks could become "pretty heated" amid farmer protests across Europe. Observers also warn that a delay could complicate relations with Mercosur partners — especially with Paraguay, which is due to take the Mercosur presidency in 2026 and is less enthusiastic about the pact.
Why It Matters
Beyond immediate trade flows, the outcome will test EU credibility with South American partners and influence the bloc's ability to negotiate large, strategic trade deals in the future. Whether the agreement is finalised this year or postponed could reshape political and commercial ties across two continents.
