Spain, Germany hail Mercosur deal but France, EU farmers fume

BRUSSELS, Belgium — Germany and Spain hailed the conclusion Friday of a controversial free-trade deal between the European Union and South America's Mercosur bloc while France said the deal was still unacceptable and farmers' unions expressed dismay.

The agreement was announced by the head of the EU's executive arm, European Commission chief Ursula von der Leyen, at a summit in Montevideo.

Although negotiations have concluded, the EU-Mercosur deal still needs to be approved by at least 15 of the European Union's 27 member nations representing a minimum of 65 per cent of the EU population.

It would create a sprawling free-trade zone of more than 700 million people between the EU states and Argentina, Brazil, Paraguay and Uruguay.

"Today, the European Union has achieved a historic agreement with Mercosur to establish an unprecedented economic bridge between Europe and Latin America," Spain's Prime Minister Pedro Sanchez wrote on X.

"Spain will work to ensure that this agreement is approved at the (European) Council, because trade openness with our Latin American friends will make us all more prosperous and resilient," the Socialist premier added, referring to the body representing EU states.

Germany's Chancellor Olaf Scholz said that "an important hurdle for the agreement has been overcome."

"After more than 20 years of negotiations, the Mercosur countries and the EU have reached a political agreement," he added on X.

Portugal's Prime Minister Luis Montenegro also welcomed the conclusion of the negotiations, saying on X the deal will "create opportunities for our citizens and our companies."

But an official in President Emmanuel Macron's office said the deal remains "unacceptable" to France in its current form.

"This is not the end of the matter, the agreement with Mercosur has not entered into force," the official told reporters.

"The deal has neither been signed, nor ratified."

France has led opposition to the deal along with Italy and Poland.

'Profound consequences'

Meanwhile the European agricultural community complained that its "fears have materialised".

The COPA-COGENA farmers group said in a statement that the agreement "will have profound consequences" for family farming across the European Union if it is ratified by EU states.

"The (European) Commission has sent a very worrying message to millions of farmers across Europe," COPA president Massimiliano Giansanti said in a statement.

The head of the German farmers union, Joachim Rukwied, said the agreement will "massively weaken our farms against the competition."

European farmers are crying foul over supposedly less stringent regulations on the sector in South America, pointing especially to the industry's role in destroying huge swathes of the Amazon rainforest, a crucial buffer against climate change.

One of the leaders of Polish farmers blockading the Ukrainian border to protest the import of Ukrainian grain said his country's farmers are against the deal with Mercosur.

"We're going to oppose it here, shout as loud as possible to block it and say that it's no good," he told AFP.

But the deal has the support of industry groups.

"The agreement provides an urgently needed growth stimulus for the German and European economy and is very good news for our companies," said Siegfried Russwurm, head of the Federation of German Industries.

The EU expects that European companies stand to save around four billion euros ($4.2 billion) a year in customs duties.

German and Spanish officials argued that the agreement with Mercosur will help boost economic security by diversifying trade.

"The Mercosur agreement is of great trade and geopolitical importance for Germany and the EU," said German Economy Minister Robert Habeck.

Spanish Economy Minister Carlos Cuerpo said "it will support the diversification of trade flows, the resilience of our supply chains, economic growth and ultimately job creation."

He called it "a very positive and balanced agreement, with unquestionable economic benefits for both regions".

Spain is Europe's leading exporter of fruit and vegetables, and the world's top producer of olives. It is one of the EU's agriculture powerhouses along with France, Germany, Italy and Poland.