Eleven EU countries push for conclusion of Mercosur trade deal

Good morning. Former EU Brexit negotiator Michel Barnier has been appointed France’s next prime minister in a bid to break the country’s post-election political stalemate. His former chief of staff, senior commission official Olivier Guersent, describes Barnier as “a kind of UFO in the French political sky” in this must-read profile.

Today, our trade correspondent reports on a fresh push to clinch a Latin American trade deal, and we explain the change of political weather over Italy’s beaches.

Have a great weekend.

Trading cards

Eleven EU members have launched a fresh bid to conclude a blockbuster trade deal with Latin America held up by French objections, writes Andy Bounds.

Context: Negotiators for the EU-Mercosur deal are meeting face-to-face for the first time in five months in Brasília as the European Commission pushes to finalise it this year. The long-delayed pact with Brazil, Argentina, Uruguay and Paraguay (plus new member Bolivia) was agreed in principle in 2019.

Now a cross-party group of leaders including Olaf Scholz of Germany, Ulf Kristersson of Sweden and Luís Montenegro of Portugal have sent a letter to commission president Ursula von der Leyen urging her to seal the deal.

“Given the context of growing geopolitical tensions, it is all the more of the essence to develop robust international alliances,” they write in the letter seen by the Financial Times, adding that “our credibility is at stake”.

They warn of Europe’s growing loss of influence in Latin America — without naming China — and point towards their “shared values” and “historical links”.

“Without the conclusion of the agreement, other powers would gain an even stronger influence on Latin American markets, both economically and politically. Over the past 10 years, European companies lost 15 per cent market shares on average in the region.”

The conclusion of the deal was delayed by EU concerns over the Amazon, with governments demanding an additional instrument toughening sustainability criteria.

Even as those concerns were being resolved, French President Emmanuel Macron blocked progress following large-scale farmers’ protests, partly incensed by fear of cheaper food imports from Mercosur.

Paris remains opposed, and EU farming group Copa-Cogeca this week renewed its attack on the deal.

But while Ireland and the Netherlands have reservations, only Austria has joined France in outright opposition, and they could be outvoted by a majority of the bloc’s 27 governments.

Von der Leyen has said she wants to conclude the deal. It will be an early test of whether she is prepared to overcome the blocks to growth identified by former Italian premier Mario Draghi, who unveils his report on how the EU can close the growing economic gap with China and the US on Monday.

Chart du jour: Globalised

Global trade faces its biggest challenge yet in the great-power rivalry between the US and China.

Throwing the towel down

The European Commission pushed Rome for decades to overhaul its system for distributing lucrative concessions to its beaches, which breaches EU competition rules.

But Brussels now seems willing to wait a little longer, welcoming Prime Minister Giorgia Meloni’s plan to change the rules in three years’ time, write Amy Kazmin and Paola Tamma.

Context: Italy’s coasts have long been monopolised by thousands of private businesses that rent umbrellas and loungers to holiday makers. These generally family-owned enterprises typically pay a pittance for setting up shop on public beaches.

Brussels has been calling on Rome since 2006 to scrap existing beach concessions and conduct an open bidding process for new licences. But a succession of Italian governments stalled, wary of displeasing bathing establishment owners, and the Italians who support them.

In 2020, Brussels launched formal infringement proceedings against Italy for failing to act. Former prime minister Mario Draghi pledged to go ahead with auctions, but his government fell before the process could get under way.

Meloni has been eager to resolve the long-running dispute with Brussels, and sent her European affairs minister Raffaele Fitto to negotiate a deal to resolve the impasse.

Those talks seem to have borne fruit.

Meloni’s cabinet on Tuesday approved an extension of the existing concessions through September 2027, committing to hold auctions for the new licences that same year.

Despite the delay, the commission cheered Meloni on. “We have reached a common understanding with the Italian authorities. That is why we very much welcome the adoption of this legal decree,” the spokesperson said.

“We hope we could close the infringement procedure as soon as possible. It’s a major decision by the Italian government, but that needs to be translated into fact,” the spokesperson said, adding that this would mean adhering to the promised timeline.

What to watch today

1. Hungarian Prime Minister Viktor Orbán and Azerbaijan’s President Ilham Aliyev speak at the European House-Ambrosetti Forum in northern Italy.

2. Nato Secretary-General Jens Stoltenberg meets Norwegian Prime Minister Jonas Gahr Støre.

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