(Reuters) -Brazilian President Luiz Inacio Lula da Silva on Friday said the European Union's latest proposal for a trade deal with South American bloc Mercosur made reaching an agreement impossible as it included a "threat" to Brazil.

The Brazilian leader was referring to the EU's addendum to the deal attaching sustainability and climate change commitments and introducing penalties for nations failing to comply with the climate goals outlined in the 2015 Paris Agreement.

"I am available to reach an agreement (on Mercosur), but with this additional letter from the EU, it's not possible," Lula told an event in Paris.

"The letter makes a threat to a strategic partner (Brazil)," he added.

Lula also said the United Nations needed to regain political strength and he criticised the World Bank and International Monetary Fund for "leaving a lot to be desired" compared to people's expectations.

"The UN needs to become representative again, to have political strength," Lula said. "We can't let the institutions function in the wrong way," he added.

(Reporting by Sergio Goncalves and Patricia Rua; Writing by David Latona; Editing by Inti Landauro and Toby Chopra)