EU Commission Approves Updated Terms of Mercosur Trade Deal

Summary

The European Commission has approved updated terms of the EU-Mercosur Partnership Agreement, paving the way for the cre­ation of the world’s largest free-trade area with four South American coun­tries. The deal aims to remove tar­iffs on var­i­ous prod­ucts, includ­ing olive oil, but faces oppo­si­tion from some EU mem­ber states over agri­cul­tural pro­vi­sions.

The European Commission has for­mally agreed on updated terms of the European Union-Mercosur Partnership Agreement (EMPA), over­com­ing the ini­tial oppo­si­tion of some mem­ber states.

The go-ahead by the European Union’s exec­u­tive arm pushes for­ward the adop­tion of the mas­sive trade treaty with four Mercosur coun­tries: Brazil, Argentina, Uruguay and Paraguay.

The goal of the trade deal is to remove most tar­iffs between the two blocs, includ­ing a ten per­cent tar­iff on olive oil and duties on table olives.

Should it come into force, the deal would cre­ate the world’s largest free-trade area, with broad eco­nomic impli­ca­tions for all involved coun­tries. 

France, Italy and Poland, three of the bloc’s largest food pro­duc­ers, have voiced oppo­si­tion to the cur­rent terms, mainly over agri­cul­tural pro­vi­sions. 

To address these con­cerns, the com­mis­sion announced stronger bilat­eral safe­guards to pro­tect ​“sen­si­tive European prod­ucts” from harm­ful import surges.

“The E.U. will grant very lim­ited access to its mar­ket to imports of agri-food prod­ucts,” the com­mis­sion explained in a fact­sheet. 

For sen­si­tive prod­ucts, includ­ing beef, poul­try and sugar, access to the E.U. mar­ket will be per­ma­nently lim­ited through grad­u­ally imple­mented quo­tas. 

“Moreover, a bilat­eral safe­guard clause can be applied if increased imports from Mercosur cause – or even threaten to cause – seri­ous injury to the rel­e­vant E.U. sec­tors,” the com­mis­sion said.

These terms will be writ­ten into a legal act, trans­form­ing gen­eral pro­vi­sions into bind­ing pro­ce­dures. Brussels stressed that Mercosur coun­tries will be fully informed to ensure smooth imple­men­ta­tion.

A cru­cial ele­ment to win sup­port for the deal is the pro­tec­tion extended to the E.U.’s geo­graph­i­cal indi­ca­tions (GIs). 

The agree­ment will rec­og­nize 344 GIs, includ­ing more than 130 extra vir­gin olive oils, ban­ning imi­ta­tions and mis­lead­ing labels.

The com­mis­sion also pro­posed a €6.3 bil­lion cri­sis fund to shield European farm­ers from poten­tial mar­ket dis­tur­bances. 

At the same time, it con­firmed that all food imported from Mercosur will have to meet cur­rent E.U. safety stan­dards, with rein­forced san­i­tary and phy­tosan­i­tary con­trols.

During the same meet­ing, the European Commission also approved the E.U.-Mexico Modernized Global Agreement (MGA). 

Once rat­i­fied, it will remove the remain­ing tar­iffs on European agri-food exports, includ­ing cheese, poul­try, pasta, apples, choco­late, and wine. Olive oil exports to Mexico are already tar­iff-free.

Both EMPA and MGA now face a com­plex approval process. 

Trade pro­vi­sions fall under exclu­sive E.U. com­pe­tence and will require a qual­i­fied major­ity in the European Council, which brings together the gov­ern­ments of all 27 mem­ber states, and a sim­ple major­ity in the European Parliament, com­posed of rep­re­sen­ta­tives directly elected by E.U. cit­i­zens.

All other aspects of the treaty, includ­ing polit­i­cal and coop­er­a­tion issues, must also be rat­i­fied by each mem­ber state, a stage con­sid­ered the most chal­leng­ing due to ongo­ing oppo­si­tion from sev­eral farm­ing orga­ni­za­tions.

Commission President Ursula von der Leyen said the pact would deliver ​“lower tar­iffs and lower costs, con­tribut­ing to eco­nomic growth and job cre­ation.” 

Agriculture com­mis­sioner Christophe Hansen argued the agree­ment is ​“bal­anced for the E.U. agri-food sec­tor,” while not­ing sig­nif­i­cant gains for spir­its, wine and dairy pro­duc­ers.

Polish Prime Minister Donald Tusk reit­er­ated Warsaw’s oppo­si­tion. ​“Poland will oppose the Mercosur agree­ment because we want to show that we won’t give up when it comes to the inter­ests of Polish agri­cul­tural pro­duc­ers,” he said. 

Italian Prime Minister Giorgia Meloni said Rome would assess the effec­tive­ness of safe­guards through con­sul­ta­tions with trade asso­ci­a­tions before tak­ing a final posi­tion. 

French trade min­is­ter Laurent Saint-Martin wel­comed the addi­tional pro­tec­tions but stressed that Paris will ​“exam­ine the pro­posal in detail to ensure the effec­tive­ness of the mech­a­nism.”