President Luiz Inácio Lula da Silva said Monday Brazil has "concerns" over the European Union's efforts to add new environmental protections to the Mercosur trade deal.
"Strategic partners should have a relationship of mutual trust, not mistrust and sanctions," Lula told a joint press conference with European Commission head Ursula von der Leyen, after the two met in Brasília.
The EU and the Mercosur nations – Argentina, Brazil, Paraguay and Uruguay – are trying to finalise a trade deal after reaching an agreement in principle in 2019 following two decades of negotiations.
But ratification by the EU's 27 members has stalled, notably over European concerns about Mercosur countries' environmental protections – particularly in the Amazon rainforest, where deforestation surged under Lula's predecessor, far-right ex-president Jair Bolsonaro, in office from 2019-2022.
The EU has proposed a "side letter" with environmental guarantees.
But although veteran leftist Lula has cast himself as the anti-Bolsonaro on environmental policy, he was blunt in his reaction to the proposed additions to the agreement.
"I told president von der Leyen about Brazil's concerns," he said. "It expands Brazil's obligations and makes them punishable by sanctions in case of non-compliance.”
He accused EU lawmakers of trying to legislate "outside their territory" with measures that "change the balance of the agreement."
A law passed in April in the EU, for example, prohibits the importing of products such as cocoa, coffee, timber or soybeans that come from deforested land.
"These initiatives represent potential restrictions on Brazil's agricultural and industrial exports," said Lula.
However, von der Leyen voiced optimism the deal could be finalised by the end of the year.
"We have the tools to get it done as soon as possible," she said.
Von de Leyen said that approving the agreement would lead to "the beginning of a new chapter" in diplomatic ties.
Brazil was von der Leyen's first stop on a Latin American tour that also took in Argentina, Chile and Mexico, a week after the EU put forward a new plan to bolster ties with the region.
Von der Leyen announced the EU would contribute 20 million euros to Brazil's Amazon Fund, a key Lula initiative to protect the rainforest.
She also pledged investment in anti-deforestation and renewable energy projects.