London Daily

Focus on the big picture.
Wednesday, Jan 14, 2026

Lula victory revives EU trade hopes for Latin America

Lula victory revives EU trade hopes for Latin America

Lula wants to get an early trade deal with the EU. Brussels needs pledges on the environment first

“This is the result we were all hoping for.” The center-left European lawmaker MEP Kathleen Van Brempt captured the mood in Brussels on Monday, as the EU breathed a diplomatic sigh of relief over the victory of left-winger Luiz Inácio “Lula” da Silva in the second round of Brazil’s presidential election.

Brussels has big ambitions in Latin America. The European Union needs to diversify its trade flows away from Russia and — to a lesser extent — China. With far-right incumbent Jair Bolsonaro on his way out of power, the EU is now keen to revive its ties with Brazil on climate change, deforestation and trade.

“I look forward to working with you to address pressing global challenges, from food security to trade and climate change,” European Commission President Ursula von der Leyen tweeted to Lula on Monday morning.

But Brussels may have to wait in line. Russia wants to trade and China will also be competing for influence in the region, especially after relations between Brazil and Beijing had soured under Bolsonaro. Chinese foreign ministry spokesperson Zhao Lijian welcomed Lula's victory on Monday, saying that China wants to raise the comprehensive strategic partnership with Brazil to a new level.

The most concrete way for the EU to get its foot in the door is to finally tie up the loose ends with the trade deal between the EU and the Latin American Mercosur bloc — made up of Brazil, Argentina, Uruguay and Paraguay.

The closer cooperation would not just ease trade between the economies on both sides of the Atlantic, but is also key for Brussels to be less dependent on China’s raw materials for its green transition.

The Mercosur pact was sealed at a political level in 2019 but has been effectively on ice since then, mostly because of the rampant deforestation of Brazil’s Amazon rainforest under Bolsonaro, which dismayed the EU and French President Emmanuel Macron in particular. Free traders also pointed to more protectionist concerns, particularly in France, which held up progress for the deal over fears of opening the floodgates to imports of Brazilian beef.

Lula's election may be the key to easing those environmental concerns and unlocking the Mercosur deal. In a huge win for the global fight against climate change, he has made clear he's keen to tackle deforestation of the Amazon.

From the EU side, the political stars are also aligned. A range of trade-friendly countries — the Czechs, the Swedes and the Spanish — are at the helm of the EU’s rotating Council presidency this year and next and have already said they want to get the deal back on track.


There may be trouble ahead


To get the agreement through the European Parliament, Brussels plans to negotiate an extra environmental protection document with the Mercosur bloc to try to assuage climate concerns.

But just how far those extra demands should go is already a sensitive discussion within the European Commission, and will likely prove to be even more contentious when it is discussed with the European Parliament, EU countries and the Mercosur countries.

"We will not nail it at the door of the Berlaymont," said a senior EU official, referring to the European Commission building in Brussels. "We need to play this carefully." The official stressed that the EU should propose something that is "more palatable for the other side."

Van Brempt, the trade committee MEP from the socialists, fired a warning against too much flexibility from Brussels. If the Commission wants this deal to pass through Parliament, extra environmental commitments from the Mercosur countries cannot be empty promises, she said. If Brazil or the other countries don’t live up to their promises, they should risk trade sanctions, in line with the EU’s new policy of ensuring trade deals are green.

If Mercosur countries have additional demands to bring to the table, then so be it, Van Brempt argued. “We have to get this deal right,” she said. “Trade is a key component of our geopolitical direction. For that, a renewed cooperation with Brazil is key.”

On his end, Lula has already said he wants to renegotiate some areas of the Mercosur deal in favor of Brazil’s industrial development. Strengthening Brazilian industry was one of his main promises during the campaign.

"In the first six months, we will conclude the agreement with the European Union," Lula said in September. That, he said, must be "an agreement that takes into account the need for Brazil to industrialize again."

Newsletter

Related Articles

0:00
0:00
Close
UK Intensifies Arctic Security Engagement as Trump’s Greenland Rhetoric Fuels Allied Concern
Meghan Markle Could Return to the UK for the First Time in Nearly Four Years If Security Is Secured
Meghan Markle Likely to Return to UK Only if Harry Secures Official Security Cover
UAE Restricts Funding for Emiratis to Study in UK Amid Fears Over Muslim Brotherhood Influence
EU Seeks ‘Farage Clause’ in Brexit Reset Talks to Safeguard Long-Term Agreement Stability
Starmer’s Push to Rally Support for Action Against Elon Musk’s X Faces Setback as Canada Shuns Ban
UK Free School Meals Expansion Faces Political and Budgetary Delays
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Prince Harry Seeks King Charles’ Support to Open Invictus Games on UK Return
Washington Holds Back as Britain and France Signal Willingness to Deploy Troops in Postwar Ukraine
Elon Musk Accuses UK Government of Suppressing Free Speech as X Faces Potential Ban Over AI-Generated Content
Russia Deploys Hypersonic Missile in Strike on Ukraine
OpenAI and SoftBank Commit One Billion Dollars to Energy and Data Centre Supplier
UK Prime Minister Starmer Reaffirms Support for Danish Sovereignty Over Greenland Amid U.S. Pressure
UK Support Bolsters U.S. Seizure of Russian-Flagged Tanker Marinera in Atlantic Strike on Sanctions Evasion
The Claim That Maduro’s Capture and Trial Violate International Law Is Either Legally Illiterate—or Deliberately Deceptive
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
Trump Announces U.S. Large-Scale Strike on Venezuela, Declares President Maduro and Wife Captured
Tesla Loses EV Crown to China’s BYD After Annual Deliveries Decline in 2025
UK Manufacturing Growth Reaches 15-Month Peak as Output and Orders Improve in December
Beijing Threatened to Scrap UK–China Trade Talks After British Minister’s Taiwan Visit
Newly Released Files Reveal Tony Blair Pressured Officials Over Iraq Death Case Involving UK Soldiers
Top Stocks and Themes to Watch in 2026 as Markets Enter New Year with Fresh Momentum
No UK Curfew Ordered as Deepfake TikTok Falsely Attributes Decree to Prime Minister Starmer
Europe’s Largest Defence Groups Set to Return Nearly Five Billion Dollars to Shareholders in Twenty Twenty-Five
Abu Dhabi ‘Capital of Capital’: How Abu Dhabi Rose as a Sovereign Wealth Power
Diamonds Are Powering a New Quantum Revolution
Trump Threatens Strikes Against Iran if Nuclear Programme Is Restarted
×