Exclusive-EU-Mercosur deal likely to take effect provisionally from March, says EU diplomat

By Andreas Rinke

The EU's free trade deal with South American countries will probably be applied on a provisional basis as soon as March, an EU diplomat told Reuters on Thursday, despite a looming challenge at the bloc's top court.

EU lawmakers dealt a blow to the bloc's contentious trade agreement with Brazil, Argentina, Paraguay and Uruguay on Wednesday by referring it to the European Court of Justice, potentially delaying it by two years.

"The EU-Mercosur agreement shall be applied provisionally once the first Mercosur country has ratified it," an EU diplomat told Reuters.

"That will probably be Paraguay in March," the diplomat added.

GERMAN BUSINESSES, CHANCELLOR MERZ CONDEMN DELAY

The EU signed its largest-ever trade pact with the Mercosur members on Saturday after 25 years of negotiations, and the delay has dismayed Germany's government and many businesses.

Supporters argue that the deal is important to offset business lost to U.S. tariffs and to reduce reliance on China. They are worried that a delay will hurt Europe's economy.

"The setback undermines Europe’s competitiveness and jeopardizes European jobs and prosperity," Tobias Meyer, CEO of the logistics group DHL, told Reuters. He said it would be good if the pact could be enacted while the court investigated.

"Europe cannot afford to fall behind further," he added.

Chancellor Friedrich Merz told delegates at the World Economic Forum in the Swiss Alpine resort of Davos on Thursday that he regretted the European Parliament's decision.

"But rest assured: We will not be stopped. The Mercosur deal is fair and balanced. There is no alternative to it if we want to have higher growth in Europe," Merz said.

Critics of the deal, led by France, say it will increase imports of cheap beef, sugar and poultry and undercut domestic farmers.

French farmers have staged major demonstrations in Paris against the trade deal with hundreds of tractors blocking roads and landmarks such as the Eiffel Tower.

FRANCE SAYS PROVISIONAL IMPLEMENTATION WOULD BE UNDEMOCRATIC

The head of France's CGB sugar beet producers' lobby rejected any possibility of the accord taking effect provisionally.

"That would be a denial of democracy. Unacceptable!" Franck Sander told Reuters.

A spokesperson for France's farm minister declined to comment.

Applying the pact provisionally, pending the ruling and parliamentary approval, could prove politically difficult given the likely backlash, and the European Parliament would retain the power to annul it later.

"If (European Commission President) Ursula von der Leyen, the European Union, were to force through a provisional application, given the vote that took place in Strasbourg, it would constitute a form of democratic violation," French government spokesperson Maud Bregeon told CNews TV, speaking before the EU diplomat's comments.

The European Commission has said it will engage with EU governments and lawmakers before deciding what to do next.

EU leaders are meeting later on Thursday in Brussels to discuss strained transatlantic relations in light of U.S. President Donald Trump's demands over Greenland.