South American leaders are gathering in Montevideo this week amid growing optimism that a long-awaited trade agreement with the European Union could finally be sealed, even as resistance mounts among key European nations.

The two-day summit, which begins on December 5, marks a pivotal moment for the proposed deal, with Brazil's President Luiz Inácio Lula da Silva expressing optimism about concluding negotiations by year's end. The Brazilian leader has emphasised the agreement's significance beyond mere trade relations, viewing it as a strategic partnership at a time of rising global protectionism.

However, the path to ratification faces significant hurdles, with France spearheading opposition and successfully rallying Poland to its cause. French authorities have promised to "fully" and "resolutely" oppose the agreement in its current form, citing concerns about agricultural competition.

"I will say this simply, we cannot ask our farmers in Europe ... to change their practices, to not use certain products and develop quality farming and, at the same time, open our markets to massive imports," said French President Emmanuel Macron as the Parliament's Lower House voted almost unanimously against the deal last week in a rare show of unity.

France’s agri-food trade balance, excluding wine and champagne, has been in deficit since 2014. INSEE data shows the meat sector has been a consistent weak point, with production costs in Mercosur countries – particularly Brazil – up to 60% lower than in Europe. Brazil's ability to achieve multiple harvests annually and benefit from economies of scale, alongside its currency devaluation, makes its products highly competitive.

French livestock farming, heavily reliant on feed supplementation, faces additional challenges from strict EU regulations on pesticides and veterinary products, further raising costs.

Warsaw joined the resistance last week, with Prime Minister Donald Tusk announcing Poland "will not accept the free trade agreement with the South American countries in this form".

Italy has now emerged as another potential stumbling block, with Foreign Minister Antonio Tajani calling for revisions to the agricultural sections of the draft agreement. While expressing support for the deal in principle, Italian Agriculture Minister Francesco Lollobrigida deemed the current draft "not acceptable", demanding Mercosur countries meet EU standards on workers' rights and environmental protection.

The political dynamics have grown more complex as Paris seeks to build a blocking minority within the EU, requiring just one additional member state to succeed. Meanwhile, Germany and Spain are pushing in the opposite direction, with German Foreign Minister Annalena Baerbock declaring the Montevideo summit "probably the last opportunity" to clinch the deal, which she deemed "essential" for the EU's strategic interests.

"It is high time to take the partnership with the Mercosur countries to the next level," Baerbock said.

Yet, dissent grows within Germany as more than 600 Bavarian farmers demonstrated earlier this week against the proposed trade agreement, joining wider European agricultural protests. Farmers in Saxony and Thuringia also recently blocked major roads with tractors, demanding a renegotiation of the deal and urging mandatory origin labelling for all produce imports.

Echoing French concerns, the German protesters lambasted a proposed 99,000-tonne beef import quota and allegedly differing production standards between EU and Mercosur nations. Industry unions claim that European farmers must follow strict environmental and welfare regulations not required of South American producers.

The upcoming Montevideo summit represents a significant moment of transition for Mercosur, which will see Argentina assume the pro tempore presidency from Uruguay. The gathering will also mark the first Mercosur appearance of Argentina's President Javier Milei, whose presence adds an element of uncertainty to the negotiations.

In fact, during a meeting with Macron in Buenos Aires last month, Milei stated he was “not satisfied with the deal” and that he was not happy with the way Mercosur worked, possibly opening a rift within the bloc as he advocates for more flexibility to negotiate independent free trade agreements outside the alliance.

If signed, the agreement would create the world's largest free trade zone, building upon Mercosur's existing strength. The South American bloc, inaugurated in 1991, recently welcomed Bolivia as a full member and readies to add Panama. It now encompasses 73 per cent of South America's territory and represents approximately 65 per cent of the region's population.

According to analyses by agriculture economist Charlotte Emlinger cited by Euronews, the proposed EU-Mercosur agreement would primarily benefit European manufacturing exporters across key industrial sectors including automotive, pharmaceuticals and textiles. French producers of premium wines and cheeses also stand to gain from improved market access.

While beef and poultry producers face increased competition, Emlinger suggests the overall impact on these sectors would likely be modest. The carefully negotiated quotas and phased implementation would help buffer any market disruption, she argues.

The deal's proponents claim it would significantly boost trade relations that have already shown robust growth regionally. According to Brazilian diplomatic sources, intra-Mercosur trade has reached $32.5bn this year, with manufactured goods accounting for 82 per cent of exports.

As Latin American leaders convene in Uruguay, all eyes will be on whether the EU Commission can navigate the competing interests to bring the 25-year negotiating process to a successful conclusion, particularly given the growing chorus of European voices calling for substantial revisions to the agricultural provisions.