After over two decades of negotiations, a potential agreement between the European Union and the Mercosur trade bloc is nearing a critical juncture. Discussions intensified in Brussels on January 8th as EU member states weighed a proposal from the European Commission to finalize the deal, which would substantially impact agricultural markets on both continents. While the Commission seeks to unlock the agreement by accelerating the disbursement of existing agricultural funds, significant hurdles remain, particularly from France, despite growing support from Italy and a scheduled vote as early as January 12th in Paraguay.
Brussels – European Union member states are still negotiating an agreement with the Mercosur trade bloc, comprised of Argentina, Brazil, Paraguay, and Uruguay, despite a push from the European Commission to finalize the deal. The agreement, which would open the European market to South American beef, poultry, sugar, and honey, has faced resistance, particularly from France, but momentum appears to be building toward a potential resolution.
Following an extraordinary meeting of EU agriculture ministers in Brussels on January 8, European Commission President Ursula von der Leyen did not secure a formal green light from dissenting nations. France remains hesitant and may defer responsibility to Italy, while Rome is signaling a willingness to approve the deal, a shift from its previous position.
Von der Leyen has proposed accelerating the disbursement of funds already allocated to the Common Agricultural Policy (CAP) for the 2028-34 period, in an effort to gain the support of Italy and France. However, this does not involve increasing the overall budget or altering the controversial structure that combines CAP funding with resources for Cohesion, which aims to reduce regional disparities and promote sustainable development. The proposal primarily makes existing funds available sooner.
Italian Prime Minister Giorgia Meloni’s government is aware of this nuance, as is French President Emmanuel Macron. Cypriot Agriculture Minister Maria Panayiotou, whose country currently holds the rotating presidency of the EU Council, stated after the meeting, “We intend to discuss and try to reach a decision on the Mercosur trade agreement at the end of this week.” Ambassadors from EU member states are scheduled to meet on January 9, and a final signature could occur on January 12 in Paraguay, concluding over a quarter-century of negotiations.
EU Agriculture Commissioner Christophe Hansen, Trade Commissioner Maros Sefcovic, and Commissioner for International Partnerships, Olivér Varhelyi, also participated in the agriculture ministers’ meeting. Sefcovic acknowledged the intensity of the discussions, saying, “After many discussions, I believe we have addressed the real concerns with real solutions.”
France Raises Concerns
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France has voiced strong objections, with Agriculture Minister Annie Genevard reminding officials that the negotiations concluded in December 2023 “were decided in an authoritarian manner by the President of the European Commission at a time when France was in difficulty.” Paris anticipates Italy will likely vote in favor of the Mercosur deal but is maintaining its opposition, warning that the agreement could still be blocked even after a potential signing in Paraguay if the European Parliament objects.
“As long as a battle is not over, it is not lost,” Genevard declared, emphasizing that “it is not at all guaranteed that the agreement will be approved by the European Parliament.” Sefcovic countered that the Commission has gone “further than ever before,” developing “a targeted package with unprecedented safeguards, safety nets, controls and rigorous checks.” He added that the EU-Mercosur agreement is expected to “increase EU agri-food exports to the region by 50%, eliminating tariffs that currently reach up to 55%,” and will include protection for 344 EU geographical indications, safeguarding iconic European food and beverage products.
Details of the Commission’s Offer
The core of the Commission’s proposal centers on allowing the immediate use of €293.7 billion ($318.4 billion) earmarked for the CAP between 2028 and 2035, rather than waiting for mid-term reviews scheduled for 2032. This practice is typically used to adjust funding if needed, with funds released only when countries meet specific conditions. This time, however, all resources could be made available as early as 2028.
The move has drawn mixed reactions. While it increases the funds available upfront, some are concerned about the changes to the rules and the removal of conditions for accessing the resources. In a letter to EU Council and Parliament presidents, von der Leyen also suggested potentially easing regulations for accessing funding for rural areas – approximately €5 billion ($5.4 billion) for Italy – which typically require projects to meet specific objectives related to connectivity, employment, and environmental sustainability. How these funds would now be allocated and under what criteria remains unclear.
During the meeting with agriculture ministers, officials confirmed that income support for farmers would be protected through the allocation of €293.7 billion ($318.4 billion) within national and regional partnership plans. A crisis reserve of €6.3 billion ($6.8 billion) was also proposed to protect the sector from market shocks and adverse weather events. At least 10% of each national plan, equivalent to approximately €48.7 billion ($53 billion), will be allocated to rural development, with member states able to mobilize up to two-thirds of the funds earmarked for the mid-term review as early as 2028.
Italy Seeks Assurances
Italian Agriculture Minister Francesco Lollobrigida estimates that the accelerated release of funds would translate to approximately €10 billion ($10.8 billion) directly supporting Italian farmers. “If the guarantees for the production world that we are asking for are certified, we will approve the signing of the agreement,” Lollobrigida said before the meeting of EU agriculture ministers. “For us, Mercosur is an excellent opportunity as an exporting system,” he added, “but we were not willing, and are not willing, to sacrifice any sector. We have asked for protection for the production world that could be damaged by this type of agreement.”
Members of the governing coalition have characterized the Commission’s proposal as an Italian victory. “The additional €45 billion ($48.7 billion) in European funds for the CAP is a victory for Italy, a victory for Forza Italia, which, within the European People’s Party, strongly defended and supported the demands of our farmers,” said Deborah Bergamini, head of the Foreign Affairs Department and national vice-secretary of Forza Italia. Antonio Baldelli, a deputy from the Brothers of Italy party, stated, “The government led by Giorgia Meloni once again demonstrates that Italy, when it firmly defends its interests, knows how to be respected even in Europe.” He added, “From an initial 20 percent cut, we have now achieved a strengthening of resources for the Common Agricultural Policy, with €45 billion ($48.7 billion) more in the next multiannual budget.” Giorgio Maria Bergesio, a League senator, echoed this sentiment, but cautioned that the funds should not be used as “a sort of compensation for the green light to the Mercosur trade agreement without reciprocity.”
Opposition Criticizes the Deal
However, the proposal has not been universally welcomed. Critics argue that the overall resources remain the same. “With the increasingly likely approval of Mercosur, Giorgia Meloni is preparing to sell off Italian agriculture in exchange for a mess of lentils,” commented Euro-parliamentarians from the Five Star Movement (The Left) at the European Parliament. They added, “The resources allocated to national plans are always the same, which means that Italy will have to compensate for the allocations with further cuts to cohesion funds. Furthermore, the much-vaunted €45 billion ($48.7 billion) for farmers is only an advance authorized by the European Commission on payments already due to Italy.”
Cristina Guarda, a Member of the European Parliament from the Greens/ALE group, echoed these concerns. “The Meloni government accepts empty promises from Von der Leyen and yields to pressure to unlock the agreement. This is not about new resources for agriculture; it’s a purely cosmetic political operation. It’s just an anticipation of resources already planned, which, according to the proposals for the 2028-2034 budget, would only have been usable after the mid-term review. Furthermore, the formula ‘up to €45 billion ($48.7 billion)’ says it all: no guarantees, no automaticity. Once again, everything is left to the discretion of the member states. Farmers do not get certainties, only announcements.”
