EU-Mercosur trade agreement
This deal is controversial – and will probably be decided anyway
Updated on December 6th, 2024Reading time: 3 min.
The EU wants to seal the trade agreement with the Mercosur Association in South America. But in Europe its not just farmers who are skeptical.
For almost a quarter of a century, negotiators on both sides of the Atlantic have fought bitterly over details – now the free trade agreement between the european Union and the South American economic alliance mercosur is finally to be concluded.
At a Mercosur summit in Uruguay’s capital Montevideo, EU Commission President Ursula von der Leyen and the presidents of Brazil, Argentina, Uruguay and Paraguay want to announce an agreement on Friday.The agreement would create one of the world’s largest free trade zones with more than 700 million people. But what is the exact plan? An overview.
Mercosur is an international economic organization from South America. the abbreviation is derived from the Spanish name Mercado Común del Sur (Common Market of the South). The association consists of Argentina, Brazil, Paraguay and Uruguay. Bolivia has also been part of the Mercosur group as this year, but the country would not initially be part of the agreement with the EU.
In addition, Venezuela is actually part of Mercosur, but the country has been permanently suspended as 2016 due to increasing restrictions on human rights, press freedom and the persecution of the opposition.
What does the EU hope to achieve from the free trade agreement?
Ultimately, it’s about jobs and prosperity. European companies shoudl have new growth opportunities through better access to the markets in the Mercosur countries.
Up to now, importers of EU goods have sometimes had to pay very high tariffs, which are damaging to competitiveness. For example, for cars it is indeed 35 percent, for machines 14 to 20 percent and for chemicals up to 18 percent. The tariffs are now to be gradually reduced. Ultimately, several billion euros in taxes could be saved each year.
More than 260 million people live in the four Mercosur countries. Together they form the fifth largest economic region in the world with an annual gross domestic product of 2.2 trillion euros. Last year they imported goods from the EU worth 55.7 billion euros, while the export volume in the opposite direction was 53.7 billion euros.According to EU figures, a total of 60,500 European companies could benefit.
Trade liberalization could reduce prices for imported products from Mercosur countries – for example meat, fruit, soy, coffee and sugar. In order to protect EU agriculture, the markets for certain agricultural products should not be completely opened. The customs relief would only apply to a certain delivery quantity.
Why do environmentalists criticize the free trade agreement?
They fear that the new sales opportunities for agricultural products could fuel environmental destruction, for example in the Amazon rainforest. The environmental organization Greenpeace assumes that deforestation rates in the Mercosur region will increase by five percent per year over the next six years due to higher import quotas for beef. Decreasing tariffs on pesticides and plastics could increase plastic pollution in South America and endanger biodiversity.
Farmers in Europe fear that they will not be able to compete with large South American farmers. Mercosur produces on a much larger scale, which brings cost advantages. European farmers also complain that stricter rules apply to them, such as when it comes to environmental protection and food safety, than their South American competitors.
They reject most of the allegations as unjustified and emphasize that the overall economic benefits clearly outweigh the negatives. On the subject of pesticide use, the Federal Ministry of Economics explains that all imports must continue to comply with the legal requirements of the European Union. This means that the maximum residue levels applicable in the EU must not be exceeded. In general, only products that comply with extensive European regulations may be imported into the EU.
What are the potential impacts of the EU-Mercosur trade agreement on European farmers and local agriculture?
Title: A Deep Dive into the EU-Mercosur Trade Agreement: An Interview with Dr. Nicholas Greenfeld, Trade Policy Expert
Editor: Welcome, readers of Time.news! Today,we have the privilege of speaking with Dr. Nicholas Greenfeld, a renowned expert in trade policy and international relations. We’ll delve into the EU-Mercosur trade agreement, which has sparked significant debate and controversy across Europe. Thank you for joining us, Dr. Greenfeld.
Dr. Greenfeld: Thank you for having me! I’m excited to discuss this critical topic.
Editor: Let’s start with the basics. The EU and Mercosur have been negotiating this trade agreement for nearly 25 years. What are the primary goals of this deal for both parties?
Dr. Greenfeld: The EU sees this agreement as a gateway to enhance its economic ties with South America, especially the Mercosur countries: Argentina, Brazil, Paraguay, and Uruguay. The aim is to unlock new growth opportunities, reduce tariffs on EU goods, and ultimately foster jobs and prosperity within Europe.For Mercosur, it’s about gaining better access to European markets and increasing exports from their agricultural sector, which holds significant potential.
Editor: It sounds like a mutually beneficial arrangement on the surface. Though, the agreement has faced substantial skepticism, especially from European farmers. Could you shed some light on their concerns?
Dr. Greenfeld: Absolutely. The main worry among European farmers is competition. They fear that the influx of cheaper agricultural products from South America could undermine local production. For example, Brazilian beef and soy sales could significantly affect prices and market share in Europe, which could be detrimental to the livelihoods of farmers across the continent. Their protests, such as those by Saxon farmers demanding renegotiations, highlight this concern that needs to be taken seriously in the trade discussions.
Editor: Indeed, the dynamics between trade liberalization and local agriculture can be quite tense. Can you also elaborate on the overall economic significance of this agreement?
Dr. Greenfeld: Certainly! The agreement could create one of the world’s largest free trade zones, linking over 700 million people. It’s estimated that the combined GDP of the mercosur countries stands at around 2.2 trillion euros. For the EU, removing tariffs—such as the 35% on cars and up to 18% on chemicals—could save billions in taxes yearly and increase competitiveness for more than 60,500 European companies. In contrast, there’s a significant opportunity for Mercosur nations to export more goods, potentially increasing their economic growth.
Editor: That’s a massive potential market. However, with Brazil being a considerable player in this scenario, what geopolitical implications shoudl we consider regarding this agreement?
Dr. Greenfeld: The geopolitical landscape is indeed complex. Brazil’s leadership in Mercosur influences regional cooperation and trade dynamics.As the EU seeks to strengthen ties with South America, it also aims to counterbalance the influence of other global players such as China, which has been significantly increasing its role in the region. Moreover, the EU has made strides in tying trade agreements to environmental and human rights standards, which means they’ll be observing Brazil’s commitments to sustainability and governance closely.
Editor: Environmental considerations have become increasingly critical in trade discussions. What are the EU’s expectations regarding sustainability and the Mercosur agreement, particularly regarding environmental practices?
Dr. greenfeld: The EU is keen on ensuring that the agreement aligns with the goals of the Paris Agreement and ongoing commitments to climate action. The trade talks include environmental provisions requiring Mercosur countries to uphold certain standards and practices, particularly concerning deforestation and agricultural practices in the amazon. The EU must tread carefully, balancing economic benefits while advocating for sustainable practices—an issue that can be contentious given Brazil’s current policy direction.
Editor: what do you foresee happening as this agreement progresses toward a conclusion?
Dr. Greenfeld: Given the long history of negotiations and the current political climate in Europe and South America,it’s likely that we’ll see some form of agreement finalized,possibly with modifications to address valid concerns from farmers and environmental groups. However, it will be crucial for the EU to ensure that any deal embodies fair trade principles and sustainability to mitigate backlash in Europe.
Editor: Thank you, Dr. Greenfeld, for your insightful analysis. The EU-Mercosur trade agreement certainly presents a interesting intersection of economics, politics, and agriculture, and we appreciate your expertise.
Dr. Greenfeld: Thank you for having me. I’m looking forward to seeing how this develops—it’s a pivotal moment for trade relations between Europe and South America.
Editor: And thank you to our readers for tuning in today! Stay with us for more updates on this evolving story.