EU-Mercosur talks to speed up with Milei win, experts say

BRASILIA/BUENOS AIRES (Reuters) – Far-right libertarian Javier Milei’s presidential victory in Argentina will not derail the EU-Mercosur trade agreement and could hasten conclusion of negotiations before he takes office on Dec. 10, diplomats and trade experts said on Monday.

Now that Milei has won, the radical outsider is expected to tone down his campaign criticism of the South American common market and Brazil’s Leftist President Luiz Inacio Lula da Silva, with no disruption in Mercosur trade foreseen, they said.

Milei’s attacks raised doubts about the future of Mercosur and led negotiators to step up efforts to overcome differences and hold weekly video conference meetings.

“Lula will probably be even more keen to get it done now,” a European diplomat with knowledge of the negotiations said.

A trade treaty was agreed in principle in 2019 after two decades of talks, but additional environmental commitments demanded by the EU led Brazil and Argentina to seek new concessions that prolonged negotiations.

Brazilian negotiators told Reuters there were few details left to negotiate and they plan to announce the deal at a Mercosur summit on Dec. 7 in Rio de Janeiro that was brought forward to be held before Argentina’s change of government.

Welber Barral, a former Brazilian trade secretary who was in Buenos Aires to follow the presidential election, said he did not see Milei following through on his threats to pull out of the trade bloc formed by Argentina, Brazil, Paraguay and Uruguay.

“The opening of markets is part of Milei’s discourse, so he will probably support the EU agreement, in spite of his criticism of Mercosur,” he said in an interview.

Pragmatism will prevail on both sides, Barral added, as trade relations are too important. Argentina is Brazil largest market for manufactured goods, mainly cars and car parts.

Milei’s likely foreign minister, Diana Mondino, told Reuters in an interview ahead of the Nov. 19 presidential runoff that while Mercosur must be modified, it should be not “eliminated” as Milei has previously suggested. Mondino also said Argentina will seek to increase trade with its neighbor, Brazil.

‘WORK TOGETHER’

Milei has labeled Lula an “angry communist” and received support during the campaign from the Brazilian leader’s predecessor, far-right former President Jair Bolsonaro.

But on Sunday night, Lula wished Argentina’s new government success and, without mentioning Milei by name, said Brazil was ready to “work together with our Argentine brothers.”

Oliver Stuenkel, a professor of international relations at the Getulio Vargas Foundation in Sao Paulo, expects Milei to continue attacking Lula occasionally, but Brazil’s experienced president will not respond to avoid any escalation.

Relations will most likely return to what they were between Argentina’s current Peronist President Alberto Fernandez and Brazil’s Bolsonaro, who were not on speaking terms, he said.

“There was no formal rupture and bureaucrats kept talking, and trade ties largely continued normally, but there was no political space for new initiatives that would require support from the presidential palaces,” he said.

While Milei is pro-trade, he is a climate change denialist and that could be a hurdle for ratification in Europe of the EU-Mercosur trade pact if he becomes a target for European environmentalists and protectionists, Stuenkel said.

(Reporting by Lucinda Elliott in Buenos Aires and Anthony Boadle and Lisandra Paraguassu in Brasilia; Editing by Paul Simao)