Macron can’t count on Meloni to kill the EU’s trade deal with South America

POLITICO - Monday, December 16, 2024

PARIS — Emmanuel Macron reckons he has found in Giorgia Meloni the perfect ally in his crusade against the European Union’s massive trade agreement with South America.

But before the French president breaks open the Champagne to celebrate the demise of a deal he has fought against for years, he may be forced to realize that the Italian prime minister is playing a different game.

After a quarter of a century of on-and-off-again negotiations, EU chief executive Ursula von der Leyen shook hands on Dec. 6 with leaders of the Mercosur bloc — which brings together Argentina, Brazil, Paraguay and Uruguay — on a free-trade accord that would create a common market of nearly 800 million people and account for a fifth of global gross domestic product.

For years Italy, the EU’s second-biggest exporter to the region, quietly supported the agreement, which enjoys the backing of a corporate establishment that sees the chance to open up new markets.

But, in recent weeks, leaders in Meloni’s right-wing government have started to question it, expressing concern that farmers could be hurt by cut-price food imports from South America. The Italian shift culminated just before von der Leyen’s Montevideo trip, with officials from Meloni’s office saying the conditions to sign the deal had not been met.

The change of tone in Rome has been music to the ears of France, where the deal is hated by farmers along with politicians across the political spectrum who want to build an alliance to block it in a future EU vote.

After lobbying the Italians for months to join the anti-deal camp, the French government has been quick to celebrate. Ministers trumpeted that France has found a new ally and, before that, Macron congratulated Meloni for making “a good move on Mercosur” at last month’s G20 summit in Rio de Janeiro.

But France risks making a big mistake by counting Meloni as an ally.

Officials with direct knowledge of the file and experts told POLITICO that Italy hasn’t yet made up its mind, and would be unlikely to oppose the deal when it eventually goes to a vote among EU member countries.

Meloni’s recent reservations mainly aim to keep the farm lobby quiet, they say, while pleasing her right-wing, trade-skeptic base. On top of that, the Italian premier has good strategic reasons to fuel ambiguity around Rome’s position as she stands to benefit from her status as the deal’s kingmaker in Brussels.

“She is playing wait and see and trying to keep a foot in both camps,” said Alberto Rizzi, a Rome-based policy fellow at the European Council on Foreign Relations who assesses that the deal would be economically beneficial to Italy.

Even Italian foreign ministry officials and diplomats aren’t sure where Italy really stands on Mercosur, added Rizzi.

Strategic ambiguity

In Montevideo, von der Leyen celebrated the deal as the first political victory of her new term. But the agreement, which would remove tariffs on goods spanning from cars to beef, is loathed by European farmers, who fear that an import glut of cheap poultry and beef could undercut them.

A blocking minority of at least four countries representing at least 35 percent of the EU’s population could still veto the agreement in a vote that would happen after the final text of the deal has undergone legal checks and translation — a process that could take several months.

Poland is so far the only big country France can count on to oppose the deal, while Ireland and Austria are also against it. To reach that critical threshold Paris would need another big ally — and Italy is the only candidate.

One person with direct knowledge of the Italian position, who was granted anonymity as they are not authorized to speak on the record, stressed that, despite appearances, Rome and Paris aren’t exactly on the same page.

While Paris still radically opposes the deal, Italy is ready to back it if it obtains concessions, such as stricter sanitary controls on imported products, as well as cash for farmers to ease the pain of South American competition. It’s a point that Meloni’s agriculture minister, Francesco Lollobrigida, made in Brussels last week.

Home fixture

Meloni’s posture on the Mercosur deal has more to do with domestic politics.

Powerful farmer lobby Coldiretti, which is close to the government and to Lollobrigida, strongly opposes the deal, which is backed by industry lobby Confindustria.

The government is meanwhile fractured on this file. The foreign minister, who also holds the trade portfolio, is Antonio Tajani from center-right Forza Italia party. Tajani backs the deal, while Matteo Salvini of the League is against it.

Meloni and the prime ministers who preceded her haven’t said much about the deal, which hasn’t attracted wide public attention. And they prefer to keep it that way.

Ask a French person in the street about the EU-Mercosur deal, and they will likely respond with a list of arguments against it. It’s a different story in Italy, where the media and political bubbles only started talking about it a few weeks ago.

Then there’s the national interest.

“It would be a mistake for Italy to oppose this agreement,” said Antonella Mori, an economics professor at the Bocconi University in Milan and Latin America expert at the Italian Institute for International Political Studies.

For Mori, Italy’s economic interests are more aligned with those of Germany, the deal’s No. 1 supporter, than those of France. Importantly, the automotive industry concentrated in the north of the country is tied to that of Germany, which itself is going through a slump and sees exports to the South American market as a potential source of salvation.

“Italy, in the end, will vote in favor of the deal,” predicted Mori.

A study commissioned by the Italian foreign ministry in 2020 also concluded that, overall, the agreement would be beneficial to the Italian economy.

For Rizzi, the analyst at the European Council on Foreign Relations, Meloni could be playing a dangerous game, as joining the anti-Mercosur camp would undermine her relationship with von der Leyen.

On top of compensation for farmers in the medium term, some think Meloni might also be tempted to trade Italy’s support for the Mercosur deal with concessions on other files, as von der Leyen’s European Commission turns its attention to reviving Europe’s industrial competitiveness and turning around the bloc’s economic slide.

“It would fit the great Italian tradition for her to try to maximize the return on investment on her vote by playing for time,” said an EU diplomat, who was granted anonymity to comment candidly about another country’s position. “Maybe she’s trying to see which side can offer her the most?”

This story has been updated.