EU-mercosur deal food and beverage summary
- Trade deal removes most tariffs, easing EU-Latin America food trade
- Ninety percent tariffs cut over decade boosting market access
- Geographical indications protected, blocking hundreds of EU product imitations
- Agreement adds farm safeguards, rapid investigations and conditional tariff suspensions
- Political opposition persists as EU expands farmer support and regulatory measures
Today, after more than 25 years of negotiations, the EU–Mercosur trade deal was finally agreed.
The deal, between the European Union and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay), has been the subject of fierce debate and much controversy.
Yet member states have now come to an agreement, with the deal being due to be officially signed in Paraguay in the coming days.
What does it mean for food and beverage? How will the renewed trade relationship between the two blocs change the industry?
1. Trade made easier between Europe and Latin America
With the deal, trade will be easier between the European Union and the Mercosur countries, which include the agricultural giants Brazil and Argentina. A range of tariff barriers will be removed, and the introduction of new tariffs heavily restricted. All in all, tariffs on around 92% of imports from Mercosur countries will be removed, as well as 91% of tariffs on EU exports to Mercosur, over a ten-year period.
Since agricultural products are one of Mercosur’s main exports to the EU, the agreement will make it easier for such products to enter the European market.
It also works the other way, and tariffs on key EU goods, such as wine, spirits and chocolate, will be removed by Mercosur countries.
The perception that the deal will result in unfair competition for European farmers, due to the introduction of cheaper goods that have not been made in line with EU standards, has created widespread opposition, and led to numerous protests, particularly in France.
2. Geographical indications will gain additional protection
While it is, in many ways, a free trade agreement, the EU–Mercosur agreement also aims to protect geographical indications. Geographical indications protect products with a protected name from being made outside a specific region, meaning that they must be made in said region to bear the name.
The deal stresses that all its parties must respect the geographical indications of their partners’ products.
In practice, this means that it will ban 344 imitations of European products with geographical indications from being developed in Mercosur countries. This includes products such as roquefort cheese, champagne, prosciutto di Parma and Irish whiskey.
3. Countries will collaborate on improving agriculture
As laid out in the agreement, dialogues between Mercosur and the EU will take place on several key topics.
Firstly, the two blocs will aim to combat antimicrobial resistance (AMR), which is a common problem in livestock. They will share information on the problem, promote research and development, and collaborate to follow up on existing guidelines.
Secondly, they will exchange information on agricultural biotechnology. Specifically, they will explore the impact of genetically modified organisms (GMOs) on trade, and aim to minimise any impact that their policies may have.
4. Safeguards for farmers have been strengthened
Since the deal was initially drawn up, negotiations have been most intensive around safeguards to protect farmers.
These safeguards include the ability of the EU to temporarily suspend tariff preferences for Mercosur products if it feels these imports threaten EU producers.
For an investigation to be triggered, the prices of sensitive products must be just 5% cheaper than their EU equivalents, combined with either their import into the EU increasing by 5% on average over three years or prices dropping by 5%.
Investigations will be concluded in four months, and in particularly urgent cases, they could be done in just 21 days.
Furthermore, in the days prior to the deal being signed, the Commission announced the suspension of tariffs on certain fertilisers, including ammonia and urea.
5. France was a major opponent of the deal
France has long been one of the deal’s biggest opponents. French leaders saw it as posing a threat to farmers by allowing unfair competition, in the form of cheap goods from Mercosur countries, entering the EU. French farmers have also protested against the deal.
The western European country recently banned imports of food containing residues of substances, including pesticides and fungicides, that are restricted in the EU.
This policy, according to France’s Prime Minister, Sebastien Lecornu, was explicitly put in place to protect France from unfair competition. Many commentators see it as in line with France’s criticisms around EU–Mercosur.
The deal was also strongly opposed by Ireland and Hungary, both of whom singled out the unfair competition they believe it will create.
6. The EU has expanded agricultural budgets to push through the deal
Widespread opposition to the deal from farmers has prompted the EU to pivot towards compromise on a number of issues.
For example, it has announced that farmers will have access to an additional €45 billion in support.
This pledge secured the support of Italy for the deal, reports Euronews, after the southern European country had long remained on the fence regarding EU–Mercosur. It did not, however, secure support from France.
The pledge came after widespread controversy last year when the EU’s long-term budget cut payments to farmers, as part of the Common Agricultural Policy (CAP), from €387bn to €300bn, albeit ring-fenced from reallocation.
Critics at the time suggested that the reduction would threaten European food security.
