View from Brussels: Waiting for Brazil

Talks on a big trade agreement between the 27 EU countries and Argentina, Brazil, Paraguay and Uruguay – known as the Mercosur bloc – wrapped up in 2019 but a number of factors have stalled progress.

The biggest hurdle has proved to be Brazil’s incumbent far-right leader, Jair Bolsonaro, who refused to make any compromises on environmental protections. EU governments have declined to ratify the deal until safeguards are put in place.

Bolsonaro also decided to make the issue personal when he insulted the wife of French counterpart Emmanuel Macron, who was one of the main voices calling for anti-deforestation clauses to be written into the Mercosur deal.

Record logging in the Amazon rainforest last year and news that the carbon sink has become an emitter of carbon dioxide does not sit well with Europeans and, by extension, their governments.

But Bolsonaro looks likely to be toppled by voters in October, as former president Luiz Inacio Lula da Silva commands a hefty lead in the polls and may return to office for the third time.

‘Lula’ was president from 2003-2010 and was released from prison in 2021 after money-laundering charges were nullified by Brazil’s supreme court, which cited judicial bias in its decision.

Lula wants to rebuild relations with the EU and that has prompted officials in Brussels to already open channels with Brazil’s government in order to prepare the ground for new trade talks.

The former president and current frontrunner insists that the current Mercosur deal is “not valid”, according to aides, while Brussels believes that the agreement is fine but requires additional add-ons, rather than a complete rewrite.

Trade officials at the European Commission, which handles all of the EU’s negotiations, are always unwilling to return to deals that have been finalised, as it risks undoing the bits of the pact that have already taken a long time to broker.

It is likely that Lula’s administration would soften its stance once in power, as getting the trade deal over the line would be a massive political win to commemorate the former president’s return.

The problem may eventually lie on this side of the Atlantic though, as France – whose agricultural sector flinches at the prospect of more imports coming into the EU’s single market – might still play hard ball. 

Lula is also not shy in coming forward and telling the EU that help will be needed once he is elected.

“Brazil needs to share research so that everything that is rich in that region can be discovered. Brazil will not close itself in,” he told MEPs this week, adding: “It will be very clear that if I win the elections, Brazil needs help from the EU.”

The EU is on a quest to rebuild supply lines and improve ties with other regions of the world thanks to Russia’s war on Ukraine and China’s continued emergence as a “systemic rival” to Europe’s interests.

That explains the renewed interest in getting Mercosur on the launchpad and may even lead to increased Brazilian participation in other schemes like Horizon Europe and the Erasmus student exchange programme.

If Lula is serious about reining in deforestation, his potential administration will also need extra resources, which might include more access to the Copernicus Earth observation satellite system. Better ties with the EU makes that a possibility.

Opinion polls cannot always be trusted but if Lula does get the top job, it promises reinvigorated transatlantic ties with South America in general.

It will also depend on whether Bolsonaro, a former army officer whose political methods have been compared to Donald Trump’s, accepts electoral defeat if the ballot swings that way.