by Bálint Medgyes
After 25 years of negotiations, the EU-Mercosur free trade and cooperation agreement[1] has been signed, creating a common market for nearly 800 million citizens. This landmark deal represents one of the largest free trade zones in the world, covering 20% of global GDP. However, the agreement faces significant opposition from multiple member states, farmers, civil society groups, and trade unions, indicating a challenging road ahead as it must still go through a complex ratification process in the Council of the EU and Parliament.[2] [3]
EU Unity or Division?
The agreement is characterized by a duality: While it demonstrates Europe's increasing ability to act on the global stage as a united front, it simultaneously deepens divisions between member states. France, Belgium, and Poland have expressed strong opposition, primarily due to concerns about disruptions to their agricultural sectors.[4] These countries fear that local farmers will struggle to compete with the rapid influx of cheaper products on the market.
From a global perspective, the Mercosur deal signals Europe's capacity to act in unity on major economic decisions, particularly regarding issues of economic security and strategic autonomy. The EU, currently reliant on expensive imports from non-aligned countries and facing risks of dependencies for Critical Raw Materials (CRMs), as well as a struggling automotive industry, has much to gain strategically from this deal.[5][6]
A crucial question remains whether member states will be able to negotiate terms that allow opposing parties to also benefit from the Mercosur agreement. The deal's success may hinge on addressing these concerns and ensuring effective implementation of its provisions.
Distorted Competition
The primary concern regarding the Mercosur Deal comes from the agricultural sector, particularly in France, which wields significant political influence and often acts as a make-or-break faction in domestic politics.[7] They raise the issue of distorted competition in the agricultural goods market, arguing that lifting market protections will lead to an influx of cheaper products at a pace local producers cannot match.
These fears amplify the existing debate surrounding trade liberalization and fair competition in the European single market. By eliminating tariffs on approximately 91% of bilateral trade4, the agreement is expected to bring a significant shock to the market, potentially putting relatively inefficient actors out of business. However, the agreement also brings numerous opportunities to European businesses, opening potential exports to nearly 300 million new end-consumers.
As a long-protected market faces rapid liberalization, governments must pay close attention and provide necessary assistance to smooth the transition. The key to survival for European producers lies in their ability to innovate, progress, and transition business models to an environment of increasing global competition, while capitalizing on the myriad opportunities presented.
Consumer Protection
One of the primary issues revolves around food safety and health standards. European consumer organizations, such as BEUC, have expressed apprehension about the potential influx of agricultural products from Mercosur countries that may not fully align with EU standards[8]. This includes concerns about the use of pesticides, growth hormones, and antibiotics in livestock production that are prohibited or strictly regulated in the EU. However, it's crucial to note that the agreement explicitly states that all imports must comply with EU standards. The European Commission has repeatedly affirmed that the deal will not lead to any lowering of EU food safety standards. The challenge lies in ensuring robust implementation and enforcement mechanisms to uphold these commitments.
Another significant aspect is the potential impact on product standards and regulations. Critics argue that the agreement could indirectly pressure the EU to relax certain regulations to maintain competitiveness. Conversely, proponents contend that the deal provides an opportunity for the EU to export its high standards, potentially elevating consumer protection norms in Mercosur countries and further underline the success of the Brussels Effect.
The agreement's provisions on regulatory cooperation and mutual recognition of standards have also sparked debate. While these measures aim to reduce trade barriers, some consumer advocates worry about their potential to undermine the EU's precautionary principle in areas like GMOs and novel foods[9], which raises questions about the agreement's compatibility with the EU's farm-to-fork strategy. Transparency and democratic scrutiny in the implementation of the agreement remain crucial for ensuring consumer interests are protected. The European Parliament and national parliaments will play a vital role in scrutinizing the deal's impact on consumers.
Sustainability
One of the primary sustainability issues surrounding the EU-Mercosur deal is its potential impact on deforestation, particularly in the Amazon rainforest. Environmental organizations have criticized the agreement, arguing that it could lead to increased deforestation.[10] Some studies suggest that the deal could accelerate deforestation by as much as 25%. This concern is particularly pressing given the critical role of the Amazon in global biodiversity and climate regulation.
Critics of the deal fail to recognize many progressive sustainability policies originating from the Mercosur block. Initiatives combating food insecurity in Argentina, such as soil sequestration, precision agriculture, and no-till farming[11] are in many cases even more advanced actionable steps towards sustainability in the agricultural sector than those in developed countries. Uruguay also stands out in its efforts, as it has been working together with the European Union on sustainable livestock farming for over five years[12].
The agreement's potential to increase greenhouse gas emissions has been a significant point of contention. Critics argue that the deal could generate an additional 340 million tons of CO₂ over ten years, which is nearly equivalent to Spain's annual emissions.[13] This increase in emissions would run counter to the EU's climate commitments, particularly the European Green Deal, which aims to reduce greenhouse gas emissions by 55% by 2030.[14]
A key challenge lies in ensuring that the sustainability provisions within the agreement are effectively implemented and enforced. The European Commission has emphasized that the deal includes concrete commitments to halt deforestation and enforce sustainable development practices.1 However, some stakeholders remain skeptical about the enforceability of these provisions.
Despite these concerns, proponents of the deal argue that it offers opportunities to promote sustainable practices. The agreement includes provisions for making the Paris Agreement an essential element of the EU-Mercosur relationship and commits both sides to implementing enforceable sustainability measures. Additionally, the EU has pledged €1.8 billion in support to facilitate a fair green and digital transition in Mercosur countries.1
Next Steps
The EU-Mercosur Free Trade Agreement stands at a crucial juncture, with two potential paths forward. The first path involves treating the agreement as a mixed agreement, which would require ratification not only by EU institutions but also by all 27 member states' national parliaments and, in some cases, regional parliaments. This route, while more comprehensive, could significantly prolong the process and increase the risk of the agreement being blocked by individual countries4.
The alternative path is to treat the agreement as an EU-only deal, which would streamline the ratification process. This approach would require approval from the European Council[15] and the European Parliament, but not from individual member states' parliaments. While faster, this route might face legal challenges and could be seen as less democratic by some stakeholders.
Regardless of the chosen path, the agreement will need to undergo legal and political scrutiny. The European Council's approval will be crucial, requiring a qualified majority vote, and the European Parliament will also play a key role in examining and potentially amending the agreement.
[1] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/mercosur/eu-mercosur-agreement_en
[2] https://www.greenpeace.org/eu-unit/issues/climate-energy/47350/toxic-eu-mercosur-trade-deal-agreed/
[3] https://www.politico.eu/article/eu-mercosur-countries-seal-controversial-trade-deal/
[4] https://www.csis.org/analysis/what-are-implications-eu-mercosur-free-trade-agreement
[5] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/mercosur/eu-mercosur-agreement/factsheet-eu-mercosur-partnership-agreement-enhancing-trade-and-investment-critical-raw-materials_en
[6] https://www.acea.auto/press-release/acea-welcomes-the-conclusion-of-the-eu-mercosur-trade-agreement/
[7] https://www.theguardian.com/world/2024/dec/06/eu-farmers-plan-protests-as-von-der-leyen-approves-mercosur-trade-deal
[8] https://www.beuc.eu/press-releases/eu-mercosur-trade-deal-likely-fail-both-consumers-and-farmers-sustainability-goals
[9] https://eu.boell.org/sites/default/files/2020-12/The%20EU-Mercosur%20Agreement%20-%20Increasing%20Pesticide%20Use%20and%20GMOs%2C%20and%20Undermining%20Healthy%20Food%20Production%20and%20Standards.pdf
[10] https://caneurope.org/eu-mercosur-deal-concluded-in-secrecy-a-tragic-blow-to-the-planet-and-democracy/
[11] https://borgenproject.org/agricultural-innovations/
[12] https://www.fiiapp.org/en/noticias/the-european-union-renews-its-support-for-sustainable-livestock-farming-in-uruguay/
[13] https://www.greenpeace.org/static/planet4-eu-unit-stateless/2023/02/64e78396-230220_gp_mercosur_nightmare_nature.pdf
[14] https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en
[15] https://www.euractiv.com/section/politics/news/warsaw-counts-on-rome-to-block-mercosur-deal/
