Baku, December 7, AZERTAC

The European Commission and Mercosur countries announced on Friday the conclusion of an agreement creating a free trade area covering 780 million people. However, the deal will have to be sealed by EU member states, according to EuroNews.

More than twenty years after negotiations began, the European Union and the Mercosur countries – Argentina, Brazil, Paraguay and Uruguay - have finally reached a trade agreement, European Commission President Ursula von der Leyen announced from a summit in Uruguay on Friday.

"Today marks a truly historic milestone," von der Leyen said, adding the deal was "an ambitious and balanced agreement".

It is "not only an economic opportunity, it is a political necessity," she said.

Speaking on behalf of the Mercosur countries, President of Uruguay Luis Lacalle Pou said: "There are no magic solutions, there are no bureaucrats or governments that sign off on prosperity. It is an opportunity."

Negotiators from the Latin American bloc were assembled in Montevideo with the EU trade negotiation team to iron out the deal, that will cover 780 million people between both zones. But the deal will need a sign off from EU 27 member states.

For several weeks, France, which opposes the agreement, has been trying to win over its partners to block the deal. Poland has officially announced its intention to join a coalition opposed to the agreement, and in a statement published on Friday Italy made its agreement conditional on guarantees for its farmers.

The votes of Ireland, the Netherlands and Austria remain subject to doubt.

"The final political agreement" reached on Friday, is "just a first stage before a long process", a Commission spokesperson said about the future signature of the deal by EU member states.

For its supporters, led by Germany and Spain, the agreement will open new markets for Europeans, while maintaining influence in the region at a time when China is increasing its investments in Latin America. Its opponents are worried about competition from imports of agricultural products into Europe.

"This will create a free market for more than 700 million people along with more growth and competitiveness," German Chancellor Olaf Scholz posted on X after the agreement was announced.

Spanish Prime Minister Pedro Sanchez also reacted on X saying that "Spain will work to ensure that this agreement is approved at the Council [which is made up of EU member states], because trade openness with our Latin American friends will make us all more prosperous and resilient."

On top of the member states' agreement, the European Parliament will also have to give its consent to the deal. The European People's Party (EPP), the centre-right group, which is the largest group, declared in a statement that "the conclusion of the EU-Mercosur trade agreement marks a historic milestone in strengthening the ties between two regions that share values and ambitions."

To address concerns over the deal, a senior commission official explained that "this is a manifestly changed agreement" compared to 2019, when a draft text was blocked by some member states, already led by France, over environmental and agricultural worries.

In the last stretch of the negotiations, the Europeans managed to introduce environmental standards as "essential" elements of the deal, the same senior official said. It will enable one party to suspend partially or in full the agreement if those standards are not respected. Binding commitments to stop illegal deforestation in Mercosur countries have also been introduced, the Commission explained.

The agreement should remove prohibited tariffs on goods like wine, cheese, spirits, chocolate, automobiles or clothing.

Limited quotas have been introduced for sensitive products such as beef, poultry or sugar. For the beef sector, it will represent imports of 90,000 tonnes each year, around 1,6% of total EU production. These products will be "gradually phased in over 7 years", another senior commission official detailed, saying that safeguards had been added in case of market disturbances in the EU.

"Certain sectors will profit: in France wine is considerably suffering these days because of decreasing exports," the same official said.

The striking of a deal in the face of strong French opposition comes at a sensitive moment for French President Emmanuel Macron, who has personally touted France's hostility to the deal, and who is currently faced with the task of appointing a new government in the wake of the collapse of the administration of Prime Minister Michel Barnier this week.