Mercosur-EU deal faces uphill battle despite tariff war

President Lula is expected to step in once again to help steer the process to completion. There is no fixed timetable for ratification, but Brazilian authorities believe Mr. Lula’s direct involvement will be key.

“[U.S. President Donald] Trump is actually helping as Europe doesn’t have many alternatives but to strengthen existing or pending agreements,” said Jorge Viana, head of ApexBrasil, the Brazilian Trade and Investment Promotion Agency, which is linked to the Ministry of Development, Industry, Trade and Services (MDIC).

Mr. Viana recently joined other officials and business leaders on a diplomatic tour through Portugal, Poland, and Belgium. The final stop, Brussels, also serves as the political heart of the European Union.

Negotiated since 1999, the agreement was announced at the end of 2024 by Mercosur heads of state and European Commission President Ursula von der Leyen. Once implemented, the deal will establish a free trade area encompassing 700 million people, with a combined GDP of $22 trillion.

Amid a rising tide of protectionism fueled by Mr. Trump’s tariff escalation, the deal has taken on greater urgency. In April, citing the impact of U.S. trade policy, the World Trade Organization downgraded its forecast for global trade flows in 2025, from a 2.7% increase to a 0.2% contraction. Officials from both the EU and Mercosur have since stepped up public messaging about the agreement’s strategic and economic importance.

But several steps remain before the deal takes effect. The current text is being translated into the EU’s 23 official languages, along with specific versions in Portuguese and Spanish for Mercosur.

The next phase involves approval by 65% of the European Council, which comprises heads of state. These votes must represent at least 55% of the EU population. The math is considered “complex” and “dynamic,” with no fixed threshold—Brazilian negotiators even use a smartphone app to monitor daily shifts in the vote count. An alignment among France, Poland, and Italy alone would be enough to block the agreement. France and Poland have repeatedly voiced strong public opposition, while Italy’s stance is viewed as ambiguous.

Securing neutrality from countries like Belgium is already seen as a diplomatic win by Brazilian officials.

The final hurdle will be a simple majority vote in the European Parliament, based on the number of members present during the session. That stage is expected to be the most difficult, as parliamentarians are often more susceptible to lobbying pressure than heads of state.

“We’ll need a major effort to win public opinion,” said Aloysio Nunes, former foreign minister and current head of strategic affairs for ApexBrasil in Europe.

According to Brazilian officials, President Lula’s personal involvement will be crucial in the final stages. Mr. Viana is among those who argue that the “revival of presidential diplomacy” since Mr. Lula returned to office in 2023 has strengthened Brazil’s global standing.

“The president’s engagement will be decisive in turning the tide,” said Mr. Viana, an ally of Mr. Lula who previously served two terms as governor of Acre and one as senator, all with the Workers’ Party (PT).

One potential boost to Brazil’s case came in May with the expected formal recognition by the World Organization for Animal Health that Brazil is free of foot-and-mouth disease without vaccination—a long-standing concern for European agricultural interests.

Brazil’s ambassador to the EU, Pedro Miguel da Costa e Silva, predicts that the agreement will be “quietly approved.” “No one wants the [political] fallout,” he said.

While optimistic, Mr. Costa e Silva warned that by the end of the European summer, “every opponent” of the deal, particularly Europe’s farm lobby and NGOs, will be mounting a “relentless campaign,” requiring a “grueling” response from Brazil. “It will be intense,” he said.

In Brazil, approval is expected to proceed with fewer obstacles. Once passed by Brazil’s National Congress and sanctioned, the changes will immediately take effect for the country’s economy, without needing ratification from other Mercosur members.

“This global conflict ends up creating opportunities and negotiation windows that become vital for countries trying to protect themselves,” said Senator Nelsinho Trad, chair of the Senate’s Foreign Relations and National Defense Committee. “It’s not a matter of if—we have to get it done.”

The agreement is expected to be reviewed by the committees on Foreign Relations and National Defense, Constitution and Justice, and Economic Affairs, before going to the floor of both the Chamber of Deputies and the Senate.