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 request 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, for example, 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 notable 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…
However, 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 possibility 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, where 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 completely. 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 labor 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
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 difficult 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. Though, it is indeed also mentioned Germany as a great beneficiary of the agreement, as it will favor the export of its automotive, chemical and pharmaceutical industries.
though, 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. “
“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 significant in a region where European influence has weakened while ChinaS 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 indeed added to underline its geostrategic importance.
How does the EU’s agreement with Mercosur impact local farmers and food quality?
Signated products from the EU. These geographical indications aim to protect the reputation of regional foods and ensure that only products genuinely originating from specific regions can be marketed under those names.
Furthermore, the agreement sets out strict requirements for sustainability and environmental protections, aligning with the Paris Agreement. This is a significant change from the initial draft,reflecting growing concerns about climate change and the impact of agricultural practices on the habitat.
Despite the optimism from industrial sectors about new export opportunities,the agricultural community remains wary.The competitive advantage held by Mercosur countries in key areas such as beef and sugar poses serious concerns for European farmers,who fear being unable to compete with the lower production costs and different regulatory standards of their South American counterparts.
The agreement illustrates the ongoing tension between fostering trade to stimulate economic growth while also protecting vulnerable domestic industries from international competition. As discussions and mobilizations continue, particularly in the agricultural sector, the long-term effects of this agreement on European markets and consumers will become clearer. Policymakers will have to navigate these complex dynamics to balance economic interests with the needs of specific industries and the public’s demand for high-quality, sustainably produced food.