Amid a whole host of discord in Europe, the European Commission has just signed the Mercosur agreement with Latin American countries after 2 years of hammering out a deal.
In fact, the free trade agreement has taken a total of 25 years to come to a table for the signing of an agreement. However, EU farmers are not best pleased. The idea is to liberalise trade between the two continents as well as level out environmental requirements imposed on EU food producers, who see the imbalance as unfair competition and a threat to their livelihoods, as many South American countries do not face the same level of stringent rules as producers in the EU.
The agreement includes an annex that imposes conditions for Mercosur producers to meet those of European producers. It also includes the possibility of suspending the alliance if one of the countries leaves the Paris Agreement on climate change actions and a commitment of the Mercosur countries to end deforestation by 2030.
Previously, trade with the region was subject to tariffs of between 10 and 35 percent. This new agreement involves the abolition of these taxes for products such as olive oil, wine, or cheese. It also removes tariffs on imports of raw materials from Argentina, such as nickel or copper, especially relevant to the EU’s energy transition.
Euro Commission deal still needs agreement in EU parliament
The sealed alliance is part of a proposal from the European Commission and must still be ratified by the 27 member states of the European Parliament in a plenary session in the EU Parliament.
French, Dutch, Polish, and Austrian governments have expressed extreme reluctance to ratify the deal and would need at least one more EU member state to veto it. Traditionally that would have been the UK. But Brexit, and that…
The agreement is expected to liberalise 99 percent of the EU’s agricultural trade and open its market to 88 percent of the EU’s agricultural goods. Spanish agri-food and fisheries exports to Mercosur increased in value by 5.4 percent per year in 2023, while imports decreased by 29.4 percent. A big difference and indicator of where this is going. The most exported Spanish products in 2023 were olive oil, wine, and fruits, while soybeans, sweets, and corn stood out on the import side from Mercosur countries.
While other massive trade states are set to close borders to protect local economies, such as the US and China, the EU and Mercosur group are looking at creating the biggest free trade zone in history in some sort of ego-fight against China and the US.
Mercosur producers will undercut EU businesses
One of the biggest bones of contention, other than just South American countries being able to produce goods that undercut European businesses, is that they will not be subject to the same costly high-level sanitary checks and standards already imposed on EU farmers. In fact, Italy’s Giorgia Meloni says that she will oppose the text if more guarantees are not offered to the European half of the deal.
Expect French, Spanish, and Italian farmers to be out blockading roads again in the new year as their livelihoods and the quality of foodstuffs are threatened by this most unpopular pact by a seemingly rogue and disinterested European administration.
