Mercosur summit opens as EU trade deal hangs in the balance

The EU and the Mercosur countries -- Argentina, Brazil, Paraguay and Uruguay -- are trying to finalize a trade deal after reaching an agreement in principle in 2019, following two decades of negotiations.

But ratification by the EU's 27 members has stalled, notably over European concerns about Mercosur countries' environmental protections -- particularly in the Amazon rainforest.

The EU has proposed a "side letter" to the agreement, with extra environmental guarantees, rankling South American leaders and slowing down progress to notching a final agreement.

Brussels wants any deal with Mercosur nations to include compliance with various commitments made as part of the 2015 Paris climate accords, which are currently voluntary.

The Mercosur summit, to be held in Puerto Iguazu, Argentina, will bring together Argentine President Alberto Fernandez and the presidents of Uruguay, Paraguay and Brazil: Luis Lacalle Pou, Mario Abdo Benitez and Luiz Inacio Lula da Silva, who will take up the bloc's pro-tempore presidency until the end of the year.

The bloc represents 62 percent of South America's population and 67 percent of the continent's gross domestic product.

Brazil's Lula has led the criticism of the EU's environmental demands, telling reporters last month that "strategic partners should have a relationship of mutual trust, not mistrust and sanctions."

Deforestation in the Amazon surged under Lula's predecessor, far-right ex-president Jair Bolsonaro, in office from 2019-2022.

But although veteran leftist Lula has cast himself as the anti-Bolsonaro on environmental policy, he told European Commission head Ursula von der Leyen in June that he had concerns over the additional environmental guarantees.

Lula accused EU lawmakers of trying to legislate "outside their territory" with measures that "change the balance of the agreement."

The EU's top diplomat, Josep Borrell, acknowledged recently that the environmental proposals have not been well-received by the South American countries and said that Europe is waiting for a concrete response to their requests.

Despite Brazil's criticisms, leaders there still hope to reach a deal.

Latin America's largest economy wants to reach a "well-balanced" result "for both parties," Mauricio Carvalho, secretary for economic and financial affairs at the Ministry of Foreign Affairs told AFP.

For Bruno Binetti, an expert on international affairs at the Inter-American Dialogue think tank in Washington, "the most" that can come out of the summit is "a specific agenda before the EU," with "demands."

"But I don't think we are at that stage," he told AFP.