Mercosur Deal: EU Parliament Protects Farmers

The protective clauses for agricultural imports in the Mercosur trade agreement are almost agreed. The European Parliament adopted the new regulation with a broad cross-party majority. In December, an agreement was reached between negotiators from Parliament and EU states to enable the free trade agreement to be concluded. The council’s approval is still pending, but this is considered a formality.

It is envisaged that countermeasures can be taken quickly if imports from the Mercosur countries Brazil, Argentina, Uruguay and Paraguay increase sharply or if there is an excessive drop in prices. This has no influence on whether the trade agreement comes into force. It is expected that it could come into force provisionally during the first half of the year.

Table of Contents

• Pay particular attention to eggs, honey and sugar
• Agreement aims to boost trade
• ECJ should examine deal
• Dispute over Mercosur vote in January

The countermeasures provided for in the protective clauses would lead to tariff benefits being temporarily suspended again. Particularly intensive monitoring is planned for imports of products such as beef, poultry, rice, honey, eggs, garlic, ethanol, citrus fruits and sugar.

483 MPs voted for the safeguard clauses, 102 against and 67 abstained.

The Mercosur deal was signed in Paraguay at the beginning of the year after more than 25 years of negotiations. A new free trade zone with more than 700 million inhabitants is to be created. The plan is to largely reduce tariffs and trade barriers between the EU on the one hand and Brazil, Argentina, Uruguay and Paraguay on the other, and thus stimulate the exchange of goods and services.

European farmers fear competition from the Mercosur states and speak of a threat to the existence of European agriculture. Environmentalists fear that greater demand for agricultural products in Europe could fuel deforestation of the rainforest in South America. Proponents of the agreement, on the other hand, see particularly great opportunities for the automotive industry, mechanical engineering and the pharmaceutical industry.

Before the free trade agreement can come into force, it must be approved by the European Parliament. However, Parliament decided by a narrow majority in January to have the ECJ examine whether the agreement is compatible with EU law before deciding on final ratification.

However, according to the legal opinion of the Council of Member States, it can be applied provisionally before a ECJ decision as soon as it has been ratified by at least one Mercosur state. This step is expected in the first half of the year.

Several German Green MPs in the European Parliament voted in January to have the EU agreement with Brazil, Argentina, Paraguay and Uruguay reviewed by the European Court of Justice (ECJ). This also caused headwinds from within his own party. If they had voted against it, there would have been no review.

Green MP Anna Cavazzini said before the vote that such protective clauses were standard in free trade agreements. How one feels about the agreement itself or the legal review is therefore less important for voting behavior.