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GLOBAL POLITICAL RISK: EU-Mercosur Deal Could Widen Rift Between France/Germany

GLOBAL POLITICAL RISK
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The EU and five South American countries that comprise the Mercosur bloc have concluded decades-long negotiations to drop tariffs on more than 90% of goods to a market of around 700 million people. 

  • The deal's signing, coming amid a major domestic political crisis in France, is likely to deepen a rift between Berlin and Paris. The latter vehemently opposed the deal amid concerns that cheap agricultural imports would undercut its farmers. 
  • EU Commission President Ursula von der Leyen signed off EU participation in the agreement at a summit in Uruguay stating: “This is a win-win agreement, which will bring meaningful benefits to consumers and businesses, on both sides. We are focused on fairness and mutual benefit.”
  • German Chancellor Olaf Scholz said in a message on X: "After more than 20 years of negotiations, the Mercosur countries and the EU have reached a political agreement… This will create a free market for more than 700 million people along with more growth and competitiveness."
  • The head of the Federation of German Industry (BDI), Siegfried Russwurm, said in a statement: “This agreement will provide an urgently-needed growth impulse for the German and European economy.”
  • Reuters reports the Brazilian government said in a statement that, "agreed texts will be published in the coming days," noting the deal will be "transformational both economically and politically." The statement added that the deal "includes changes in public procurement, auto trade, critical mineral exports when compared to 2019 draft." 
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The EU and five South American countries that comprise the Mercosur bloc have concluded decades-long negotiations to drop tariffs on more than 90% of goods to a market of around 700 million people. 

  • The deal's signing, coming amid a major domestic political crisis in France, is likely to deepen a rift between Berlin and Paris. The latter vehemently opposed the deal amid concerns that cheap agricultural imports would undercut its farmers. 
  • EU Commission President Ursula von der Leyen signed off EU participation in the agreement at a summit in Uruguay stating: “This is a win-win agreement, which will bring meaningful benefits to consumers and businesses, on both sides. We are focused on fairness and mutual benefit.”
  • German Chancellor Olaf Scholz said in a message on X: "After more than 20 years of negotiations, the Mercosur countries and the EU have reached a political agreement… This will create a free market for more than 700 million people along with more growth and competitiveness."
  • The head of the Federation of German Industry (BDI), Siegfried Russwurm, said in a statement: “This agreement will provide an urgently-needed growth impulse for the German and European economy.”
  • Reuters reports the Brazilian government said in a statement that, "agreed texts will be published in the coming days," noting the deal will be "transformational both economically and politically." The statement added that the deal "includes changes in public procurement, auto trade, critical mineral exports when compared to 2019 draft."