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economy Free trade negotiations

Mercosur and EU talks remain stuck

While plenty of political will exists on both sides to reach terms for a free trade agreement, concerns over agricultural imports from European farmers continue to stall progress.

Tuesday 6 March, 2018
French President Emmanuel Macron, right, talks with farmers as he visits the 55th International Agriculture Fair at the Porte de Versailles exhibition center in Paris on February 24.
French President Emmanuel Macron, right, talks with farmers as he visits the 55th International Agriculture Fair at the Porte de Versailles exhibition center in Paris on February 24. Foto:AP Photo/Thibault Camus, Pool

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The Mercosur trade bloc and the European Union are in the final stages of settling on terms for a comprehensive free trade agreement. Paraguay’s foreign minister Eladio Loizaga said Friday negotiations would conclude in “two to three weeks.”

The diagnosis may sound promising, but negotiators have already missed the March 3 deadline for this negotiating period. That follows several previous rounds without a final deal, stretching back to when talks gained significant momentum in December at the World Trade Organization summit in Buenos Aires.

Mercosur, short for the Common Market of the South, has four permanent members: Argentina, Brazil, Paraguay and Uruguay. Venezuela is currently suspended, while Bolivia is a candidate nation. The European Union includes 28 countries across the continent, of which Germany and France are the largest economies.

Political will for a deal is there: European leaders need new markets to combat decreasing domestic demand and economic stagnation within the bloc, while the return of neoliberal governments to many South American nations has brought with it the goal of increasing international trade. But both sides remain stuck on the same issues. The European agricultural sector wants beef out of the deal. But that’s the primary reason Mercosur nations want an agreement to happen in the first place.

For weeks now, French farmers have been up in arms about the potential terms of the agreement, which they fear would flood the European market with South American agricultural products and severely hurt their livelihoods. Europe has higher standards overall for food products, which raises prices. With tariffs removed, South American produce would easily undercut that, and put thousands of workers out of business, farm groups say. 

On February 21, French farmers drove tractors through downtown areas and blocked highways to protest the current terms. The main French agriculture union estimated over 20,000 farmers participated.
In response, French president Emmanuel Macron met with hundreds of farmers at the Élysée Palace in addition to making the customary visit by the French president to the annual agriculture fair in February and attempted to assuage farmers’ complaints at both events.

France’s agriculture minister also suggested adding an emergency mechanism to the terms of the agreement that could halt beef imports into Europe in the case of severe market disruption.

This past week, Irish farmers joined in. Lobbying members of the European Parliament, representatives of Irish beef producers said increased beef imports from South America, combined with those from Canada (with whom the EU recently signed a free trade agreement) would cripple Irish producers.

Protests especially intensified when EU negotiators offered to raise beef import quotas from 70,000 tons a year to 99,000 in order to help reach a compromise.
 
EU officials are keen on the deal because it would open up a massive untapped market for advanced machinery and automobile manufacturers. In a mirroring of European complaints, some South American manufacturers are concerned about how Europe’s technological and manufacturing advantage might impact them.

Europe is also interested in new markets for dairy products, public tenders and maritime services. And it wants stronger protections for food and drink names, such as champagne, which have been used freely in other parts of the world. In addition to produce, South American business leaders are excited about new markets for biofuels.

Argentine President Mauricio Macri met in person with Macron and German Chancellor Angela Merkel on a five-day European tour in January. Publically, the leaders expressed enthusiasm about a deal, but even then, Macron said he was wary of the meat problem.

A free trade agreement between the two blocs has been in the works for over 20 years but regained traction last year. Talks built momentum through a series of meetings between state leaders, first at the WTO summit in Buenos Aires in December, then in Davos, Switzerland at the 2018 World Economic Forum in January and finally a bilateral visit to France by Macri.

Like in many other international issues, the shadow of the United States also falls over the deal. Both sides want to prove to themselves and the world they can trade successfully on the global scale without having to involve an increasingly closed off US government.

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