The trade agreement between the European Union and Mercosur countries, signed in 2019, sparked a series of protests by French farmers this week. According to them, cheaper South American products, subject to less stringent environmental regulations, would enter the European market at the expense of local suppliers.
The agreement, which still needs to be ratified, includes import quotas for meats and other agricultural products from Mercosur countries – Argentina, Brazil, Paraguay, and Uruguay – either tax-free or with reduced taxes. On the other hand, it would provide European producers greater access to South American markets, potentially increasing exports of products such as wine, cheese, powdered milk, and olive oil.
French opposition to the pact, which also includes the country’s government, gained momentum this week with pressure from retail chains announcing a boycott of Brazilian meat and other Mercosur products. The movement, initiated by Carrefour, was joined by the Les Mousquetaires group, owner of the Intermarché and Netto chains.
These recent protests began after EU lawmakers signaled efforts to finalize the trade deal. Last week, one of the European Parliament’s vice presidents, Danish MEP Christel Schaldemose, told the press there is legislative support within the EU to approve the agreement.
The treaty between Mercosur and the European Union has been under negotiation for over 20 years, with its conclusion announced in 2019. However, disagreements between the Brazilian government at the time and the EU prevented it from being submitted to the European Parliament for analysis, and negotiations were recently reopened.
Several European countries, such as Spain and Germany, support the agreement, which would also open the doors for increased exports of EU cars, machinery, and pharmaceuticals.
Experts interviewed by Brazilian newspaper Valor Econômico predict that, given the French opposition, the agreement is unlikely to succeed. It may either fail to materialize or, if approved, be significantly watered down. Brazilian diplomats claim the agreement is close to being finalized this December, but its approval requires unanimous consent from all EU parliaments. Even if the European Commission approves it without French consent, the economic clauses – which are central to the deal – cannot be implemented.
Terms
Under the agreement, the EU would allow 99,000 tons of beef – 55% of which would be fresh, high-quality beef and 45% frozen beef – to be gradually introduced over five years, subject to a 7.5% tax (down from the current 20%).
The EU’s total beef consumption of 8 million tons per year represents 1.2% of global consumption. Currently, the EU imports about 200,000 tons of beef annually from Mercosur countries.
The agreement would also allow duty-free imports of 180,000 tons of poultry annually from Mercosur countries. This represents 1.4% of the EU’s total poultry consumption of 12.6 million tons projected for 2024, according to EU data.
Together, the four Mercosur countries are already the EU’s leading suppliers of chicken. When considered individually, Brazil – the world’s largest poultry producer – ranks first, followed by Ukraine.