Berlin says Mercosur not abandoned, but industry not amused

The German government said it anticipates the imminent signing of the EU free trade agreement with four South American Mercosur countries, as the country's business community reacted angrily to the delay.

"Postponed is not abandoned," a deputy government spokesman said in Berlin on Friday.

He stated that it still depends on Italy, as Italian Prime Minister Giorgia Meloni has requested a delay, resulting in the signing of the EU free trade agreement with four Mercosur countries - some 25 years in the works - being postponed.

The deputy government spokesman said that Meloni managed to convince Brazilian President Luiz Inácio Lula da Silva that after negotiating this agreement for more than two decades, another two or three weeks would not make a difference.

"For us, it is important: We want the conclusion of the Mercosur agreement and are therefore very pleased that this has become tangible and achievable with this European Council," the spokesman said, adding that it is now only a matter of timing. The European Council is the formal name for the grouping of all 27 EU leaders.

German business not pleased

German businesses have reacted with sharp criticism to the failure to sign the deal.

"The renewed delay is a setback for Europe's credibility as a geostrategic player," Tanja Gönner, chief executive of the Federation of German Industries (BDI), criticized on Friday.

A new date for the signing of the deal is expected in the first half of January.

"The leaders must do everything to ensure that Mercosur is concluded in January," said Gönner. For this, some states would need to overcome their reservations. Apart from Meloni, French President Emmanuel Macron is a top critic.

VDA president: "World not waiting for Europe"

The delay is also "bad news" for the German Association of the Automotive Industry (VDA), it said on Friday.

The EU is sending a signal of weakness at a time when a strong European economy is crucial, and is putting its credibility at risk, VDA President Hildegard Müller criticized.

The world is not waiting for Europe, she said: "The automotive industry in the EU is more dependent than ever on improving market access in other countries [outside the EU]."

According to the European Commission, the new free trade zone with more than 700 million inhabitants would be the largest of its kind worldwide and is also intended as a counter to the protectionist tariff policies of US President Donald Trump.

The plan is to largely dismantle tariffs and trade barriers between the EU and four countries in the South American economic organization Mercosur: Argentina, Brazil, Paraguay and Uruguay. Negotiations for the deal began back in 1999.

Bolivia has since joined the bloc but was not part of the negotiations. Venezuela has been suspended as a member.

German Chancellor Friedrich Merz said in Brussels regarding the agreement that he had not given up hope that perhaps even the French government, which has so far been obstructive, might still be persuaded to agree. But even if this should not be the case, he said, the qualified majority is secured.

The qualified majority means that at least 15 of the EU's 27 states, representing 65% of the bloc's population, must agree for a proposal to go forward.