A long-awaited trade deal between the EU and the Mercosur group of South American nations has finally been agreed to, following a summit in Uruguay.
Mercosur is a regional trade association consisting of Brazil, Paraguay, Uruguay and Argentina. Venezuela is also a member, but has been suspended since 2017.
On Friday (6 December), leaders from the two blocs met in Uruguay to ink the deal that has been 25 years in the making.
‘Win-win’
President of the European Commission, Ursula von der Leyen, said the agreement was a “win-win”.
“We have listened to the concerns of our farmers and we acted on them. This agreement includes robust safeguards to protect your livelihoods. EU-Mercosur is the biggest agreement ever, when it comes to the protection of EU food and drinks products.”
Paraguayan president Santiago Peña, a one-time critic of the agreement, said that it had been a “long journey” but represented a “great opportunity” for both sides.
800 million customers
The deal will reportedly create a market of 800 million people, said Federico Steinberg, visiting fellow at the Center for Strategic & International Studies:
“Until now, trade relations between the two regions have underperformed relative to their potential, especially in merchandise trade (and less so in investment)
“The agreement is set to change this dynamic, opening Mercosur’s highly protected market to European industrial goods.”
Standards
The negotiations for the deal stalled at various points over the last two decades, largely due to concerns in the food and agriculture sectors.
Von der Leyen insisted that food and health standards would remain “untouchable”.
“Mercosur exporters will have to comply strictly with these standards to access the EU market. This is the reality of an agreement that will save EU companies €4bn worth of export duties per year.”
Details
According to an EU factsheet, products must still meet European standards when entering the market and over 350 food products will benefit from Geographical Indication protection.
A geographical indication (GI) is a distinctive sign used to identify a product which comes from a particular region (i.e. champagne from the Champagne region in France).
The agreement also contains chapters on digital, green and critical minerals, with tariffs also being cut on machinery, textiles and automobiles.
National politics
Von der Leyen’s comments reflect an unease among many countries and sectors over the deal with the Latin American trade bloc.
Attention now turns to the domestic political scene in both South America and Europe, where the deal faces scrutiny.
French president Emmanuel Macron had long raised objections over the agreement, citing the need to protect France’s farmers.
‘Unacceptable’ and damaging
Macron reportedly told von der Leyen that the deal was “unacceptable” as it currently stood and that his government would try to block a deal. Given his domestic political troubles, and the power of farmers in France, Paris appears likely to be a persistent objector to the arrangement.
The Italian and Polish governments have also both suggested they might be against the deal, meaning that there might be enough opposition within the EU to block the agreement passing. Spanish farming groups are also against it.
The secretary for international relations of the Union of Small Farmers (UPA), José Manuel Roche, told Euractiv that he believed the EU-Mercosur agreement “could seriously damage European agriculture and family livestock farming,” especially in key sectors such as beef, pork, and rice.
Additionally, Argentinean president Javier Milei described Mercosur as a “prison” and said the bloc and “its restrictions” were “an obstacle” to Argentina during the summit.