Politico | 6 March 2023
EU hopes Macron will budge on Latin American trade deal
BY GIORGIO LEALI, CAMILLE GIJS AND SARAH ANNE AARUP
PARIS — The planets now seem aligned to finally push a trade deal between the EU and Latin American countries over the finish line. Well, all planets but one — Jupiter, France’s nickname for Emmanuel Macron.
EU negotiators are traveling to Buenos Aires this week for a final stretch of trade talks with the Latin American Mercosur countries. But the main opponent of the deal is less than a 90-minute rail trip away from Brussels, in Paris. The French government says it wants to wait and see before signing off on the deal. But currently it’s mostly waiting.
The discussions could get tricky, as Brussels will only sign on the dotted line if Brazil, Argentina, Uruguay and Paraguay agree to extra climate commitments that it has now put to the Mercosur countries in writing for the first time.
Publicly, there are few signs that France will budge. “I have held a firm position and I will continue to hold it,” Macron told farmers in late February.
In Brussels, though, several EU diplomats said that Paris’ opposition to the deal has become less vocal. They see this as a sign that France could change its mind as geopolitical tensions following the war in Ukraine and the coronavirus pandemic strengthen the case for the 27-nation bloc to diversify its trading relationships.
“We all expect a shift in Paris but this has not been tested politically yet,” said an EU diplomat, predicting that “this year will be the real test” for France after the election last year of Luiz Inácio “Lula” da Silva installed a leader in Brazil with whom Europe can do business.
The political context in Paris has changed, too, since Macron won reelection last year for a second and final term as president, another EU diplomat said, meaning he faces less pressure to please France’s globalization-skeptic voters.
Paris wants the Mercosur bloc to commit to stop illegal deforestation in the Amazon, to comply with the Paris climate agreement, and to apply the same environmental and sanitary standards as EU farmers. “We are still far from that,” a French official said.
It’s a message that Macron drove home last week, albeit indirectly, on a trip to Africa where — posing before a scenic backdrop of rainforest in Gabon, on Central Africa’s Atlantic coast — he emphasized the importance of primary tropical rainforests in soaking up carbon emissions.
One more thing ...
The European Commission has to assuage the concerns of France, the European Parliament and NGOs, and it has been working on a legally-binding addendum on how to include extra environmental criteria from the Mercosur countries without having to reopen the original trade deal and make changes to it.
The secret document has yet to be published, and the French government hasn’t yet taken a position on it. But the same French official conceded that France’s worries could be addressed without reopening the deal itself — a sign that the additional protocol could be enough to persuade Paris to change its mind.
Supporters of the deal stress that much has changed since it was first struck in 2019, including the fact that the EU now has new rules banning the import of goods whose production entails deforestation. Also, last year, the EU implemented a new carbon border tax that would hit polluting competitors around the world.
Former EU trade commissioner and WTO chief Pascal Lamy said the Commission should be brave and defy Paris in a vote amongst EU capitals.
“At the end of the day, the Commission should ask the Council for a vote, saying that we have spent a lot of time trying to get everyone to agree and that there is not a blocking minority of member states. I had to do it myself when I was commissioner," said Lamy, noting that the trade section of the deal doesn’t need the unanimous support of EU capitals to pass.
Opposition to the Mercosur deal is almost unanimous in France, with all political groups and the country’s powerful farm lobby FNSEA constantly describing it as a threat to farmers and consumers.
Backing the deal could mean losing the support of French farmers, who could then swing towards Marine Le Pen’s far-right National Rally, Macron’s arch-nemesis.
“Many small farmers switched to the National Rally, it’s the pressure of the National Rally,” as Lamy put it.
Healthy diet
When Macron in late February visited the Salon de l’Agriculture, a major farming event on the outskirts of Paris, he spent most of his day with livestock breeders and had lunch with meat industry representatives worried that the Mercosur deal would open the floodgates to imports of South American beef.
“Feeding the French people with merde (shit) so that we can export other products to South America is inadmissible,” farmer Julien Georges, who owns a herd of 140 Charolais cattle in the Lorraine region, told POLITICO as Macron stood nearby.
But not everyone is against the deal in France. Business organizations in France and Europe in the past repeatedly urged Brussels and Paris to unlock the deal.
“We are unable to defend the agreement. Even if we are in favor of it, politically it does not pass,” said a French industry representative, who refused to speak publicly, stressing the political sensitivity of the deal in France.
The French government is gearing up to face additional pressure as Brussels is moving faster to push the deal beyond the finish line. Officials from the economy and trade ministries are testing the waters, for instance by setting up meetings with industry representatives.
“We know very well that some want to make progress on [the deal], we will see what balances can evolve,” said one official from the French prime minister’s office, requesting anonymity due to the sensitivity of the matter.
For Lamy, the former trade commissioner, the time has come for Paris to finally be pragmatic and back a deal where Europe has more to gain than to lose.
“If you think that you can open that market without having to pay something when it comes to agriculture … you must be dreaming!”