Mercosur replies to EU trade deal addendum, talks to resume, Brazil says

BRASILIA (Reuters) -Negotiators for the European Union and Mercosur on Thursday discussed the next steps towards completing their long-awaited trade deal after the South American trade bloc responded to a European addendum to the agreement, officials said.

The European Commision said negotiators held a video conference.

“We also received earlier today a paper from Mercosur that we will use as a basis for further engagement,” the commission said in a statement, adding that talks are aimed at concluding the negotiations before the end of the year.

The trade agreement was reached in 2019 after two decades of negotiations but has been on hold due to environmental concerns.

Earlier this year, the EU presented Mercosur with an addendum to the agreement that included environmental safeguards to address reservations by many EU member states.

Brazil, which currently holds the pro tempore presidency of Mercosur, called the additions protectionist and pushed back against more open government procurement provided for in the proposed trade deal.

A source at Paraguay’s foreign ministry told Reuters the Mercosur countries have appeared to agree on a response to the EU, overcoming tensions within the trade bloc that had delayed a joint reply.

“There is a general agreement with Brazil not to accept terms that hurt the development of the Mercosur nations,” the source said.

Diplomats worry that the accord, which would represent the largest trade deal struck by the EU in terms of population, could fall apart if it does not get completed by the end of the year.

EU negotiators have been waiting for Mercosur’s reply since March. Many had hoped for a swift conclusion to the agreement under President Luiz Inacio Lula da Silva, who overhauled Brazil’s environmental policies to protect the Amazon rainforest since taking office this year.

(Reporting by Anthony Boadle in Brasilia, Philip Blenkinsop in Brussels, Lucinda Elliott in Montevideo and Daniela Desantis in Asuncion; Editing by Josie Kao and Stephen Coates)