Brazil's Lula proposes Mercosur trade deal with China after EU accord

Brazil's President Lula da Silva visits Uruguay


Wed, January 25, 2023

(Reuters) -Brazilian President Luiz Inacio Lula da Silva said on Wednesday that he favored an agreement between Mercosur and China in a plan to modernize and open the South American trade bloc to other regions.

On a visit to Uruguay to dissuade its government from reaching a deal on its own with China, which would undermine the Mercosur customs union, Lula said the long-awaited Mercosur accord with the European Union must be completed urgently.

"Let's intensify the talks and firm up this agreement (with the EU) so that we can then discuss a possible agreement between China and Mercosur and I think it is possible," said the leftist president who took office again on Jan. 1.

"We want to sit down as Mercosur and discuss with our Chinese friends the Mercosur-China agreement," Lula said, adding that China is Brazil's biggest trading partner.

Talks for the EU-Mercosur trade agreement were completed in 2019, but environmental concerns stalled the deal before it was approved by the legislatures of the EU member states.

Uruguay's President Lacalle Pou said that his country needed to open up its economy to the world and it could discuss parallel trade arrangements outside of Mercosur.

Last year, Uruguay entered into formal negotiations for a free-trade agreement with China, a decision criticized by the other Mercosur members, and Uruguay recently advanced in talks to join the Trans-Pacific Partnership.

"At the same time we are going to create a technical team with Uruguay, Brazil and no doubt the other countries to see what we really want and need from our relationship with China," Pou said.

(Reporting by Gabriel Araujo and Anthony Boadle; Editing by Bernadette Baum)