Brazilian President Luiz Inácio Lula da Silva dispatched his foreign minister and trade minister to Brussels this week with instructions to accelerate negotiations on the EU-Mercosur trade agreement, a deal that has been under negotiation, in various forms, for more than 25 years.

The urgency is driven by the French electoral calendar. France holds legislative elections in June, and polls suggest significant gains for the National Rally, which has pledged to block the Mercosur agreement on agricultural and environmental grounds. A National Rally majority, or even a strong enough minority to control trade policy, would likely kill the deal for the foreseeable future.

What Is at Stake

The EU-Mercosur agreement would create one of the world's largest free-trade zones, covering a combined population of 780 million people and approximately $800 billion in bilateral trade. For Mercosur nations (Brazil, Argentina, Uruguay, and Paraguay), the deal offers preferential access to the European market for agricultural exports, particularly beef, poultry, sugar, and ethanol.

For the EU, the agreement provides tariff reductions on manufactured goods, improved access to public procurement markets, and strengthened intellectual property protections across South America.

The deal has been technically complete since 2019 but has been blocked by a combination of European concerns about Amazon deforestation, French agricultural protectionism, and political instability in Argentina.

France as the Veto Point

France is the decisive obstacle. Under current EU trade policy procedures, a qualified majority in the European Council can approve the agreement, meaning France cannot unilaterally block it. But French opposition has historically been sufficient to prevent other EU members from moving forward, given the political cost of overriding Paris on a matter it considers vital.

President Macron has oscillated between conditional support and outright opposition to the deal, depending on the domestic political moment. His current position, support in principle subject to additional environmental guarantees, is widely regarded in Brussels as a placeholder designed to defer a decision until after the legislative elections.

Brazil's gamble is that Macron, facing the prospect of losing his legislative majority, might be willing to finalize the deal now as a legacy achievement, and that the European Commission and a sufficient number of member states would be willing to bring it to a vote before French politics make it impossible.

The Broader Context

The Mercosur negotiation is about more than trade. It is a test of whether the European Union can execute a major trade agreement at a time when protectionist sentiment is rising across the continent and the political window for liberalization is closing.

It is also a test of Brazil's ability to diversify its trade relationships. China is now Brazil's largest trading partner, and the relationship is deepening. A Mercosur deal with the EU would give Brazil a counterweight, reducing its dependence on Chinese demand for commodities and strengthening its economic ties with Europe.

For the United States, which is not a party to the negotiations, the deal has implications nonetheless. A closer EU-Mercosur economic relationship could complicate American efforts to build supply chain alternatives to China in Latin America, or it could complement them, depending on how the final agreement is structured.

Either way, the next three months will determine whether 25 years of negotiation produce a result or join the growing list of trade agreements that were perpetually almost finished.