EU urged to conclude Mercosur trade talks amid environmental concerns
Dairy Reporter | 15 January 2024
EU urged to conclude Mercosur trade talks amid environmental concerns
A total of 23 trade bodies have called for the swift approval of the EU-Mercosur free trade agreement, which will make it easier to export EU agri-food products including key dairy commodities to Argentina, Brazil, Paraguay and Uruguay and vice versa.
From wine to cheese, many European agri-food products currently face high tariffs when
exported to Mercosur countries, with EU and Mercosur producers both losing out on trade
opportunities. The deal, the terms of which were agreed in 2019, is yet to be ratified,
however, after a push-back from trade unions, NGOs and environmental groups caused
the European Parliament to push ‘pause’ on the final approval, instead passing a resolution
that the FTA ‘cannot be ratified as it stands’.
More recently, in December 2023, the stage was set for the EU and the four Mercosur
countries to sign the FTA in Rio de Janeiro – only for French president Emmanuel Macron
to declare that the deal did not offer sufficient environmental safeguards, specifically
regarding deforestation and sustainability.
The deal has sparked controversy over the years, including from the European
Ombudsman who criticized the Commission for not completing a sustainability
assessment.
Green MEPs Saskia Bricmont and Anna Cavezzini recently penned an op-ed on why the
deal would be ‘a setback for people and planet’, explaining that the deal ‘would increase
deforestation and the destruction of some of our planet’s most unique and crucial
ecosystems, like the Amazon’.
The trade opportunities for EU and Mercosur exporters are significant, as it would lead to
market liberalization for many of the EU’s key agri-food products. The spirits trade for
example generates €180m through existing trade, but products are slapped with tariffs of
between 20�35%. If the FTA comes into force, commodities such as olive oil, wine and
chocolates will be quota- and tariff-free.
European dairy producers exporting cheese, milk powder and infant formula – who currently face tariffs of 28% for cheese and powder and 18% for formula – will be subject to zero-duty quotas, which would significantly ease trade with the four members of Mercosur.
The open letter, addressed to the presidents of the European Parliament, European
Council and the European Commission and signed by the likes of The European Dairy
Association, spiritsEUROPE, CAOBISCO and 19, states that the deal would reduce red tape
and open up Mercosur’s market with over 270 million consumers to EU producers.
“It is important to recognise the huge opportunities the agreement offers, which will help
maintaining a strong industrial structure in the EU, including in rural areas, and thereby to
safeguard the jobs and well-being of millions of European citizens,” the letter reads.
“Given that the EU lacks substantial reserves of key raw materials necessary for the green
and digital transition and the fact that a substantial proportion of global growth is
expected to come from outside of the EU in the next decade, our industries need open
export markets to sell European goods and services and procure raw materials at a
competitive prices. The agreement is therefore an economic, social, and geopolitical
imperative.”
The signatories add that the agreement provides ‘a very strong incentive and the right
tools for collaboration to maintain the region’s sustainable development pledges, including
the halt of illegal deforestation’ and call on political leaders to ratify the FTA ‘without
further delay’.
The trade organizations who back swift ratification also highlight the geopolitical
importance of the agreement, which many analysts believe could help foster even closer
ties between South American businesses and China, Mercosur’s largest trading partner.
“Having the EU�Mercosur agreement in place will boost the integration of our economies
and help to diversify our value chains both for imports and exports,” the letter explains.
“This is key for the competitiveness of our export-oriented sectors that create tens of
millions of jobs in Europe and provide an essential contribution to the prosperity and
standards of living of European citizens. It also helps to promote the EU’s open strategic
autonomy in times of rising economic security concerns by partnering with like-minded
countries.”
