Italy plans to back Mercosur, paving way for EU trade deal

Italy plans to back the Mercosur free-trade agreement with a South American bloc of countries in a vote that will likely be the final major hurdle for the European Union to clinch the accord, which has been in the works for 25 years.

Italy is expected to reverse course and support the deal when EU ambassadors vote on the measure on January 9, according to people familiar with the matter. That would allow the EU to sign the treaty with the Mercosur countries – Brazil, Argentina, Uruguay and Paraguay – on January 12.

A spokesperson from the Italian government declined to comment. Nothing has been finalised and the plans could still change.

If agreed, the deal would give the EU evidence that it can flex its muscles on the global stage, after being accused of weakness by the US. The EU is seeking to project greater economic clout as it tries to reduce reliance on both Washington and Beijing amid increasingly strained trade ties.

The EU-Mercosur trade pact would create a 780 million-consumer market, phasing out tariffs on goods such as cars and giving Europe wider access to Mercosur’s vast agricultural sector. The deal would offer both sides an alternative to the US after President Donald Trump imposed a slate of global tariffs over the past year.

The EU failed to finalise the free-trade agreement last month after Italy and France led a campaign to delay it, arguing it still lacked appropriate protections for Europe’s farmers.

Meloni had been seeking extra safeguards for the agricultural industry as well as additional funds for farmers from the bloc’s budget, said the people, who spoke on the condition of anonymity.

“There have been discussions, work and progress during the past two weeks,” European Commission spokeswoman Paula Pinho told reporters in Brussels Monday. “We are on the right path to consider signing hopefully soon.”

France, long the chief holdout on the pact, reiterated its opposition to the accord on Monday. Paris’ position is “clear and constant: the agreement is not acceptable as it stands,” government spokeswoman Maud Bregeon said on BFMTV. “In its current form it’s neither equitable nor fair.”

The deal can pass without support from France and just needs a qualified majority of the EU’s 27 member states.

Last month, French President Emmanuel Macron, who has come under domestic pressure from farmers, argued that the treaty didn’t provide adequate safeguards. Over the weekend Prime Minister Sebastien Lecornu said France planned to prohibit food imports from South America or other locations that contain pesticides banned for use in the EU.

The proposed accord is the largest ever negotiated by the EU. For more than two decades, talks have perpetually paused and restarted as officials tried to appease concerns over both environmental protections and agrifood standards for the Mercosur bloc.

Bloomberg Economics has estimated the deal would boost the Mercosur bloc economy by up to 0.7 percent and Europe’s by 0.1 percent. Geopolitically, it would also strengthen the EU’s footprint in a region where China has emerged as a major industrial supplier and commodities purchaser.