Fate of EU free-trade deal looms as Milei hosts Mercosur summit

The fate of a landmark trade deal with the European Union, which France is trying to block, looms large over a summit this week of South America's Mercosur bloc.

Brussels in December struck a deal with Mercosur's founding members – Argentina, Brazil, Paraguay and Uruguay – which would allow the EU to sell more vehicles, machines and pharmaceuticals to South America in return for allowing in more meat, sugar, rice and soybeans from the region.

The agreement has been 25 years in the making, but still needs to be ratified by EU member states and the EU parliament.

It has faced stiff opposition from France, where farmers worry about being undercut by less-regulated Latin American peers, while enjoying backing from Germany, Spain and Portugal, among others.

"Today, the ball is in Europe's court," Ariel González Levaggi, director of the Center for International Studies at the Catholic University of Argentina (UCA), told AFP.

But "there isn't much willingness on the part of Brussels to move forward, mainly because of the French resistance," he added.

EU and South American backers of the deal had hoped Trump's tariffs blitz could breathe new life into a deal that would give exporters on either side of the Atlantic new outlets for their products in the event of punishing US duties.

For Florencia Rubiolo, a researcher at CONICET, Argentina's scientific and technical research council, it's "of strategic interest for all Mercosur members, both individually, and as a bloc, to see this deal be ratified." 

Among other things, she argued, it would show Argentina's President Javier Milei that there is value in being part of the group, after his government has railed against Mercosur's constraints on members striking solo trade deals.

Milei is gunning for a free-trade deal with the United States, and he has suggested he could walk away from Mercosur if necessary to clinch an agreement with Washington.

'Lowest ebb'

The biannual Mercosur summit comes at a low point in relations between Brazil and Argentina, South America's biggest and second-biggest economies respectively.

Milei, a huge fan of US President Donald Trump, has made no secret of his disdain for veteran leftist Lula, referring to him in the past as "corrupt" and a "Communist."

Lula has accused the Argentine of talking "nonsense."

The contempt between the two was plain to see when Lula hosted Milei at a G20 summit in Rio de Janeiro last November.

The tensions could be exacerbated if Lula uses his trip to Buenos Aires to visit ex-president Cristina Fernández de Kirchner, who is serving a six-year sentence for fraud under house arrest.

Fernández de Kirchner on Tuesday requested permission for Lula to pay her a solidarity visit, in a move likely to anger her arch-nemesis Milei.

Permission was granted by a court on Tuesday morning, though it was not clear, however, whether Lula will risk upsetting his Argentine counterpart on home truf.

"We may be experiencing the worst period in relations between Brazil and Argentina, in terms of political convergence," Juliana Peixoto, an expert in international relations at the Latin American Faculty of Social Sciences, told AFP.

She said she nonetheless expected Mercosur, which also includes Bolivia, to endure the tensions.

"It has a small but stable core of trade and has other related agendas that allow it to survive," she said.