The treaty, supported by most South American countries and pushed by Germany and Spain, has met with strong opposition from France, which fears that agricultural imports to Europe will affect its powerful agricultural sector.
South America's Mercosur trade bloc will meet in Uruguay on Thursday, with the group likely to use the occasion to announce a long-delayed trade deal with the European Union after last-minute negotiations to approve it.
The trade deal, supported by most South American countries and pushed by Germany and Spain, has met with strong opposition from France, which fears that agricultural imports to Europe will hurt its powerful farming sector.
Negotiators from all sides met in Brazil last week, senior diplomatic and government sources told Reuters , and delegations are expected to travel to Montevideo if a deal is reached during virtual talks continuing this week.
European Commission President Ursula von der Leyen could even travel to the December 5-6 summit in the Uruguayan capital, two European sources said, although most cautioned that nothing was likely to be signed. One source said the EU chief had booked a plane ticket just in case.
"The latest round of negotiations ended with important progress," Mauricio Lyrio, secretary of economic affairs at Brazil's foreign ministry, said Monday. "We are hopeful. The pending issues are being presented to the leaders for finalization."
Bernd Lange, a German Social Democrat who chairs the European Parliament's trade committee, said on Tuesday that the internal EU situation was the main obstacle to a deal and that the decision to travel this week remained uncertain.
"They are discussing on the 13th floor (office of the Commission president) whether to take the luggage and go to the airport or not. It is a bit complicated," Lange said during a briefing.
The trade deal, under negotiation for more than two decades, has been held up by European concerns about agricultural competition, while Brazil, Argentina, Paraguay and Uruguay - major producers of soybeans, corn and beef - have criticised European protectionism.
However, Brazilian President Luiz Inácio Lula da Silva said last week that the deal was being negotiated directly with von der Leyen in a new round of personal talks in Brazil. Lula is confident that the agreement will be finalized this year.
Others, however, were sceptical. "If Ursula goes to Montevideo it will be to show the EU's commitment to concluding the agreement, but it will not be signed," said a European diplomat in Brasilia.
Another diplomat in Uruguay said: "I'm still 60-40 in favor of it going nowhere."
IS THERE AN AGREEMENT?
Paris has tried to convince other EU members to form a minority against it. Poland recently joined the opposition. However, France needs a minimum of three countries representing more than 35% of the EU population to block the deal.
Other EU countries, including Germany and Spain, are leading a coalition of 11 member states in favour. They want new trade routes that would reduce dependence on China and insulate members from trade tariffs planned by US President-elect Donald Trump.
An agreement between the EU and Mercosur was initially reached in 2019, but it was never ratified due to EU demands for commitments on deforestation and climate change. Some officials fear the same could happen again now, even if a final text is agreed.
"While we will applaud if something is signed in Montevideo this week, we will have to wait and see when it actually comes into force," said Ignacio Bartesaghi of the Catholic University of Uruguay.
A final, legally binding version of the deal would also need to be carefully reviewed and translated into some two dozen languages before it could be formally signed, Brazilian negotiator Lyrio said. This could still take months.
MILEI COULD DEBUT
Argentina's libertarian president, Javier Milei, is also expected to make his debut at a Mercosur event at the Montevideo summit, after his thinly veiled threats to withdraw from the bloc unless he is allowed to seek bilateral trade deals outside it, including with the United States.
Like outgoing Uruguayan President Luis Lacalle Pou, Milei wants the group to be more flexible. Under Lacalle Pou, Uruguay had begun formal negotiations on a free trade agreement with China, a decision his successor is unlikely to uphold.
According to some diplomats, the EU-Mercosur talks will influence Milei's approach to the group.
If the EU-Mercosur deal goes ahead, Uruguayan foreign policy adviser Bartesaghi said it would "throw cold water" on any plans by Milei to break ties with the bloc, because it would show he can achieve something.
A deal strengthens the "argument to keep the group together, buys time and reassures Milei," he said, adding that if it fails, it could strengthen Milei's argument.
