Lula wants to see Mercosur forging new trade deals

Brazilian President Luiz Inácio Lula da Silva defended the idea of pursuing more trade deals through Mercosur despite growing political differences among the bloc's leaders.

The Mercosur trade bloc is made up of Argentina, Brazil, Paraguay and Uruguay, with Bolivia set to join. The 64th summit of heads of state of Mercosur members and associated States was held on Monday in Paraguayan capital Asunción.

"This Mercosur meeting was very important. In it, we discussed extraordinary prospects for new partnerships, the [trade] agreement with the European Union and forging agreements with China and the United Arab Emirates, in addition to Bolivia's entrance into the bloc and the positive sign of Panama moving closer to Mercosur. I’m very optimistic about our integration process and the construction of a strong bloc," Lula told reporters on the sidelines of the summit.

Argentine President Javier Milei, a fierce right-wing critic of his left-wing Brazilian counterpart, has avoided Lula since taking office in December and did not attend the summit, but he sent foreign minister Diana Mondino.

"I see that we’re heading towards the end of Mercosur, since the bloc is constantly under attack," André Pereira César, a Brazilian political analyst at Hold Consultoria, told BNamericas.

"The bloc’s biggest deterioration started at the beginning of the Jair Bolsonaro administration [2019-22] in Brazil, which was much more favorable towards seeking a commercial agreement with the US than focusing on the region," said César. “Now Mercosur is under attack from the Argentine president who has a vision that is very similar to that of Bolsonaro, preferring trade talks with the US rather than trying to establish stronger ties within Mercosur.”

Lula and Uruguay’s center-right President Luis Lacalle Pou are also at odds on a major political issue. Lacalle Pou, who assumed the rotating presidency of Mercosur during the summit, said that the presidential elections set for July 28 in Venezuela must be free and transparent, while Lula, who is a supporter of Venezuelan President Nicolás Maduro, has avoided addressing the issue.

A future rupture of Mercosur would have the biggest negative impact on Paraguay and Uruguay, which as the bloc's smallest economies would have less bargaining power to negotiate trade agreements with other regional blocs, said César.