Sources indicate progress in EU-Mercosur trade negotiations on contentious issues

Negotiators from the European Union and South America finished two days of negotiations on trade, reporting "significant progress" on the contentious issues holding up the long-anticipated EU-Mercosur accord, according to two sources close to the negotiations.

Sources say that it now looks likely that negotiations on this issue may be concluded positively before the end of the year. The meeting marked the first face-to-face talks since April.

"The round of negotiations went very well. There was significant progress in the areas of the environment and government procurement," said a source at the Brazilian foreign ministry, where the talks were held.

"A new round of negotiations should take place in a few weeks," the official added.

Eleven governments of the EU, in a letter to President of the European Commission Ursula von der Leyen this week, asked for a swift conclusion of the 25-year-in-the-making trade deal.

"It is now urgent to secure the progress reached so far and close the negotiations," the letter seen by Reuters said. "We believe that all elements are in place to allow for a rapid conclusion of negotiations by the end of 2024," the prime ministers of Germany, Spain, Portugal, Sweden, Denmark, Finland, Croatia, Estonia, Latvia, Luxembourg and the Czech Republic wrote.

Mercosur groups Brazil, Argentina, Uruguay, Paraguay, and more recently Bolivia, in a market that is a much-wanted destination for EU manufacturing exporters, although European farmers, notably in France, fear the competition it would bring.

The deal was concluded in 2019, but its ratification has been held up by EU demands for commitments on Amazon deforestation and climate change.

In January, during protests by French farmers, French President Emmanuel Macron again reiterated his hostility toward the deal, citing environmental concerns and what he described as unfair competition faced by farmers.

The main French farmers' union, the FNSEA, said on Friday that it was against reopening negotiations because the EU-Mercosur deal would heighten competition for beef, poultry, rice, sugar, and ethanol producers.

"European agriculture should not be sacrificed in order to conclude international trade accords. On the contrary, agriculture should be protected and considered one of the main strategic European sectors," the union said in a statement.

With the European election over, now is the time to finalise the deal, the 11 prime ministers said in their letter.

"The agreement will create a free trade area encompassing more than 700 million people, creating enormous opportunities for European businesses and workers in markets which have been relatively closed up until now," the letter said.