EU-Mercosur trade talks progress on divisive issues, sources say

BRASILIA (Reuters) – European Union and South American negotiators ended two days of trade negotiations on Friday with “significant progress” on contentious issues that have been holding up the long-overdue EU-Mercosur agreement, two sources close to the talks said.

The sources said the meeting, the first in-person talks since April, went well and negotiations still seem to be on course for a positive conclusion before the end of the year.

“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.

Mercosur joins Brazil, Argentina, Uruguay, Paraguay and more recently Bolivia in a market that is a sought-after destination for EU manufacturing exporters, though European farmers, especially in France, fear the competition it will bring.

More than two decades after negotiations began, the agreement was concluded in 2019 but was stalled by EU demands for commitments on Amazon (NASDAQ:AMZN) deforestation and climate change.

In the midst of demonstrations by French farmers in January, French President Emmanuel Macron reinforced his opposition to the deal, saying it would cause environmental damage and subject farmers to unfair competition.

The main French farmers’ union FNSEA said on Friday it opposed the resumption of talks, saying the EU-Mercosur agreement would increase competition for producers of beef, chicken, rice, sugar and ethanol.

“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.