San Francisco Frontiers - Brazil threatens to walk if EU delays Mercosur deal

The last-mile upset drew a stern rebuke from Brazil's President Luiz Inacio Lula da Silva, who told his European Union partners the time to close the deal was now or never.

"I've already warned them: if we don't do it now, Brazil won't make any more agreements while I'm president," Lula told a cabinet meeting. "We have given in on everything that diplomacy could reasonably concede."

Twenty years in the making, the pact to create the world's biggest free-trade area is backed by Germany and many of the EU's 27 nations, keen to diversify trade in the face of US tariffs.

The deal would allow the EU to export more vehicles, machinery, wines and spirits to Latin America, while facilitating the entry of South American beef, sugar, rice, honey and soybeans into Europe.

Fearing negative fallout for its agricultural sector, France has long been a holdout, but had failed to muster enough support to block the accord -- until now.

The European Commission was expecting member states to approve the deal in time for EU chief Ursula von der Leyen to fly to Foz do Iguacu in Brazil to sign it with Mercosur partners on Saturday.

But with just days to go, Italian Prime Minister Giorgia Meloni broke cover on Wednesday and said Rome was not ready.

"It would be premature to sign the deal in the coming days," she told parliament, arguing that some of the safeguards Italy wants to protect its farmers were still to be finalised.

That threw von der Leyen's plans for a weekend signature in serious doubt, although a commission spokesman said EU leaders will discuss the matter at a Brussels summit Thursday.

"I hope she has a refundable ticket," quipped one diplomat about the commission chief, speaking on condition of anonymity.

- 'Pretty heated' -

Key power Germany as well as Spain and the Nordic countries strongly support the Mercosur pact, eager to boost exports as Europe grapples with Chinese competition and a tariff-happy administration in the White House.

German Chancellor Friedrich Merz said Wednesday he would push "intensively" for a sign-off before the end of the year, describing the issue as a test of the "European Union's ability to act".

But Paris had already thrown a spanner in the works by calling for a vote delay, demanding robust safeguard clauses, tighter import controls and more stringent standards for Mercosur producers.

President Emmanuel Macron told a cabinet meeting Wednesday that France would "firmly oppose" the EU forcing through the deal.

With Hungary and Poland also averse, Meloni's move means critics would now have enough clout within the European Council to shoot down the deal, were it to be put to a vote.

Talks "could get pretty heated", a European diplomat said, speaking of the coming Brussels deliberations, which will take place against a background of farmer protests against the deal.

Meloni said Italy does not intend "to block or oppose the agreement as a whole" and was "very confident" the conditions would be met for Rome to sign at the start of 2026.

Brussels has insisted on getting the trade deal over the finish line by the end of the year -- calling it a matter of credibility with regard to the EU's South American partners.

And some fear further roadblocks down the road in case of a delay, with Paraguay, which is less keen on the agreement, set to take over as Mercosur head in 2026.

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P.Adams--SFF