How the EU-Mercosur trade deal affects European farmers
The EU-Mercosur trade deal is a controversial agreement that aims to create a free trade area between the European Union and the Mercosur bloc, composed of Argentina, Brazil, Paraguay and Uruguay. The deal, signed in 2019 but not yet ratified, has sparked protests from European farmers, who fear unfair competition from cheaper and less regulated South American agricultural products. In this post, we will examine the main arguments for and against the deal, and the implications for the future of European agriculture.
What is the EU-Mercosur trade deal?
The EU-Mercosur trade deal is the result of 20 years of negotiations between the two parties, and the largest trade agreement ever concluded by the EU. The deal aims to eliminate tariffs on 91% of goods traded between the EU and Mercosur, and to facilitate access to public procurement, services and investments. The deal also includes provisions on environmental and labour standards, human rights, animal welfare, and food safety.
According to the European Commission, the deal would save EU exporters €4 billion in duties per year, and boost the EU’s GDP by €15 billion1. The main sectors that would benefit from the deal are the automotive, machinery, chemical, pharmaceutical, and textile industries. The deal would also strengthen the EU’s strategic partnership with Mercosur, and enhance its influence in the region.
Why are European farmers opposed to the deal?
The main opponents of the deal are European farmers, especially those in France, Ireland, Poland, and Austria. They argue that the deal would expose them to unfair competition from South American agricultural products, which are cheaper and less compliant with the EU’s high standards on environmental and health protection.
The most sensitive products are beef, poultry, sugar, ethanol, and rice, for which the deal would grant Mercosur preferential access to the EU market through tariff-rate quotas. For example, the deal would allow Mercosur to export 99,000 tonnes of beef to the EU per year without tariffs, which represents 1.2% of the EU’s consumption. The deal would also reduce the EU’s import tariffs on ethanol from 19% to zero, and on sugar from 98% to zero.
European farmers claim that these concessions would threaten their livelihoods, as they would not be able to compete with the lower production costs and weaker regulations of Mercosur countries. They also denounce the environmental and social impacts of the deal, such as the deforestation of the Amazon rainforest, the violation of indigenous rights, and the use of pesticides and hormones in animal farming.
What are the arguments in favour of the deal?
The supporters of the deal, on the other hand, argue that the deal would offer new opportunities for European exporters, consumers, and investors, and that the fears of European farmers are exaggerated and unfounded. They point out that the deal would not lower the EU’s standards or requirements for imported products, and that all imports would have to comply with the EU’s rules on food safety, animal health, and plant health.
They also stress that the deal would include safeguards and mechanisms to protect sensitive sectors, such as the possibility to impose safeguards measures, anti-dumping duties, or sanitary and phytosanitary measures in case of market disruptions or health risks. Moreover, they claim that the deal would promote sustainable development and cooperation on climate change, biodiversity, and human rights, by incorporating the commitments of the Paris Agreement and the UN 2030 Agenda.
They also contend that the deal would not have a significant impact on the EU’s agricultural production or income, as the quotas granted to Mercosur are relatively small compared to the EU’s domestic market and production. For instance, they note that the EU produces 8 million tonnes of beef per year, and that the quota for Mercosur would represent only 1.25% of that amount. They also argue that the deal would diversify the EU’s sources of supply and reduce its dependence on imports from other regions, such as the US or China.
What is the future of the deal?
The EU-Mercosur trade deal is still pending ratification by the EU’s member states and the European Parliament, as well as by the Mercosur countries. The ratification process could take several years, and face political and legal obstacles in both sides. Several EU countries, such as France, Ireland, Austria, and Belgium, have expressed their opposition or reservations about the deal, and have demanded more guarantees on environmental and social issues. The European Parliament has also adopted a resolution in October 2020, calling for the renegotiation of the deal to ensure its compliance with the EU’s climate and biodiversity goals.
The Mercosur countries, meanwhile, have also shown signs of division and reluctance about the deal. Brazil, under the presidency of Jair Bolsonaro, has been accused of undermining the deal’s environmental and human rights commitments, and of failing to address the deforestation and fires in the Amazon. Argentina, under the presidency of Alberto Fernández, has expressed doubts about the economic benefits of the deal, and has sought to renegotiate some of its terms. Paraguay and Uruguay, on the other hand, have been more supportive of the deal, and have urged their partners to ratify it as soon as possible.
The EU-Mercosur trade deal is therefore facing an uncertain future, and its fate will depend on the political will and the public opinion of both parties. The deal represents a major opportunity for economic and strategic cooperation, but also a major challenge for the protection of the environment and the rights of the people.
