After 25 years of negotiations, the political representatives of the EU and the Mercosur managed to conclude an agreement on 6 December in Montevideo that creates the largest free trade area in the world, with access to a market of over 750 million consumers on both sides of the Atlantic. The texts of the agreement signed by the presidents of the Department Uruguay, Argentina, brazil and Paraguay (Bolivia recently joined Mercosur, but is not included in the agreement) and by the president of European CommissionUrsula Von der Leyen, were published this Wednesday. The final document incorporates some changes compared to the 2019 preliminary document which aim above all at its adaptation to the legislation Paris Agreementagainst climate change.
The submission of the agreement will eliminate tariffs on more than 91% of goods that the EU exports to Mercosur and will do so progressively, for periods of up to 15 years. these are high tariffs which, such as, reach 35% in the case of cars, leather goods or clothing, or 27% for wine. The European Commission has estimated that eliminating tariffs will allow companies to export to Europe a saving of 4,000 million euros. This is a significant figure, if we take into account that EU companies export goods and services for a total of 84 billion to the four founding countries of Mercosur.
Sectors that applaud…
Though, the enthusiasm with which the European Commission – and the Spanish government, in particular – welcomed the signing of the agreement is not unanimous among the productive sectors. Generally, industry and services Europeans applaud the expectation of more business there; Meanwhile,the countryside is preparing to take to the streets against a deal that will deliver more Pagricultural and livestock products to Europe.
So, the industry machinery, that of carsthe sector textile and that of footwear, the chemical substance, the products pharmacistsappliances and foods such as chocolate, olive oilHim thisHim wine or spirit drinks are rubbing their hands in Spain and europe over the possibility of exporting, without the current high tariffs, to a market of 273 million people.
They also applaud financial serviceslas telecommunicationsmaritime transport or postal and courier services. These are all some of the sectors identified as clear winners by the European Commission. The conclusions are consistent with those drawn for Spain from the report ‘The economic impact of the EU-Mercosur agreement’, published by the Ministry of Commerce in 2021, in which a total of 41 production sectors are analysed. “For Spain it means strengthening its relevant role in the Mercosur region. And it is indeed also an opportunity for growth and job creation, on the basis more advanced sectors technologically and cleaner,” concludes the report, directed by Professor María C.Latorre.
Unlike the draft text agreed in 2019, the one now adopted in 2024 contains new provisions on the matter public procurement, this will benefit the concessionaire companies. For the first time, Mercosur will open its public procurement to foreign European companies who will compete on equal terms with local companies and, for the moment, it will not be open to other countries.
…and sectors that protest
Nothing to do with how the signing of the agreement was received in the primary sector, which had already announced it mobilisations throughout Europe and, in particular, also in Spain, were a protest is being called this Monday in front of the Ministry of Agriculture. The agricultural sector feels “the big loser” of a free trade agreement in which,in its opinion,they have been used as “currency” without taking his interests into account,as he denounced the president of asaja,Pedro Barato, the same day the agreement was signed in Montevideo.
In agricultural and livestock products, the four Mercosur countries have a clear competitive advantage over those of the EU. Specifically, the sectors of beef, sheep and poultry as some of the most vulnerable in Europe, as well as those in sugar and rice. Mercosur countries also have a competitive advantage over Europe minerals, leather and wood, according to an analysis by the Bank of Spain.
Import limits: “One beef steak per European per year”
To address the difficulties that the free market with Mercosur could cause for some of these more sensitive sectors, the agreement limits imports. which will be able to reach Europe from meat beef, dairy, ethanol, pork, poultry, honey, sugar or rice.
Mercosur and the European Union close a free trade agreement in Montevideo /Eph
In the case of beef (considered the most sensitive sector) the agreement does not eliminate tariffs on imports from Mercosur fully. Includes only the gradual entry in Europe up to 99,000 tonnes of meat per year with a tariff of 7.5%. “This limitation is equivalent to one steak per year per European citizen,” he said. the Minister of Economy, Carlos Bodyto allude to “the potential impact that imports could have on this sector and the protection it will have in the future”.
The issue of mirror clauses
But farmers and breeders fear above all the importation into the European market of foods that do not respect the standards, such as the use of plant protection products or labour legislation, that are imposed on producers and manufacturers in the region.
From the ministry of Agriculture, it is claimed; However, the new agreement incorporates “mirror clauses”, therefore the strict European standards for protection plant and animal health and food safety They will be applied equivalently to all imports from third countries; Environmental and labor commitments were also incorporated. Therefore, such as, products imported from Mercosur will have to comply with the limitations in force in the EU pesticide residues or the marketing of hormone-treated meat of growth, they explain in Agriculture.
Protest act by Ecologistas en Acción against the EU-MERCOSUR agreement. / Ecologists in action
Satisfaction in the wine sector
The agreement also includes call protection “geographical indications” of foods and drinks, among which 59 were included denominations of origin spanish (Manchego, Jabugo, Baena, Ribera del Duero, Cariñena or Brandy de Jerez cheese, among others).
the European Committee of Vitivinicultural Companies (CEEV), of which the Spanish Wine Federationexpressed support for the free trade agreement.”After 25 years of negotiations, the time has come to quickly finalize and ratify this agreement. The initial provisions on wine market access and protection of geographical indications were already promising, but the latest revisions that address environmental problems They bring further benefits to both parties. In these tough times, the agreement represents a vital opportunity for European wineries to access new markets and attract more wine consumers,” he said.Mauricio Gonzalez-Gordonpresident of the CEVV.
Spain and Germany, major beneficiaries
Spain stands out among the countries that can benefit most within the EU from the implementation of the new trade agreement. Not only for its extensive trade relations with the Mercosur countries, but also for cultural factors, such as language. portugal, Belgium and Italy According to a report from the Bank of Spain, they also lead the EU countries where trade with Mercosur is most relevant. However, it is also mentioned Germany as a great beneficiary of the agreement, sence it will favor the export of its automotive, chemical and pharmaceutical industries.
However, in general, there is agreement in underlining that “it will be the Mercosur countries that will have the greatest impetus”, we read in the report “The economic impact of the EU-Mercosur agreement” by the Spanish Ministry of Commerce.
The time of geopolitics
In any case, the analysis of the effects of the agreement goes far beyond the economic aspect.Above all, “the winner is Iberoamerica,” he extols Nuria Vilanova, president of CEAPI, a business council made up of 320 presidents of the largest Ibero-American companies on both sides of the Atlantic.“In a world that is inside power war and the reorganization of whoever will lead it, that Ibero-America wins is the important thing, and that it valorises Spain as a bridge and springboard between the two realities”, adds the founder of the consultancy firm Atrevia.
“Neither in Spain nor in Europe should we allow ourselves to be dragged by the blocs of the global West,or the global South. We must consider the alliances that interest us and that is why the agreement with Mercosur makes sense this geostrategic moment”Adds Villanova. In his view, “power, in the long term, has to do with demographics, essential minerals, water, energy and the ability to produce food. These are the factors that this free trade agreement provides and which allow strategic interests to be defended. Spain could not miss this opportunity.”
“The agreement not only provides economic benefits, it has them a geostrategic role critically important in a region where European influence has weakened while China’s influence has increased,” reads the Secretary of Commerce’s report. “In the face of China’s recent advance, the EU will be the first major trading partner to formalize an agreement with Mercosur, which neither the United States nor China has, which guarantees preferential access to EU countries in a area currently very protected”, it is added to underline its geostrategic importance.
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What are the concerns surrounding job losses and market access for agricultural groups in the EU due to this trade deal?
Ts a unique opportunity to strengthen the trade relationship between the EU and Mercosur,” said a representative from the CEEV.
With the backing of a range of agricultural and food sectors, especially in wine, cheese, and olive oil, stakeholders are optimistic about the prospects of increased exports to a vast market. The strict adherence to geographical indications ensures that products like Manchego cheese and Rioja wine will be protected, reinforcing the quality and reputation of European culinary treasures in Mercosur countries.
However, the reaction from agricultural groups that see themselves at a disadvantage cannot be ignored. The concerns over market access, potential job losses, and lowered standards for imported goods weigh heavily against the positive outlook from industry leaders in machinery, textiles, and financial services.The upcoming protests across europe signal a growing dissent that could influence future negotiations and regulatory frameworks.
As the EU and Mercosur look to finalize the details of the free trade agreement, balancing the benefits for industrial sectors and the protection of vulnerable agricultural markets will be crucial. This delicate juggling act will ultimately determine whether the agreement is hailed as a victory for economic cooperation or criticized as a concession to corporate interests at the expense of rural communities and farmers.