The European Union and Mercosur countries are working to conclude their long-standing trade negotiations by the end of the year.

Mercosur is a trading bloc of countries in South America.

However, despite 25 years of negotiations, the deal still lacks unanimous support from European member states due to concerns over the future of the agricultural sector which conflict with the bloc’s strategic demands.

Here’s a look at the deal and its concerns.

The EU-Mercosur trade agreement

The trade deal aims to establish one of the world’s largest free trade zones, with 750 million people, or about a fifth of the world’s population.

It aims to reduce trade barriers and tariffs to make it easier for companies on both sides to export, similar to the free trade agreement between the United States, Mexico and Canada.

For the EU, the deal would mean lower tariffs on products like cars, machinery and chemicals, while for the EU, Mercosur country, this would improve access to EU markets for agricultural products, including sugar, beef and poultry.

A first agreement was concluded in 2019 after negotiations began in 1999; however, it was not approved due to strong opposition, notably from France.

Countries supporting the agreement

Germany, Spain and Portugal are among the EU countries supporting the deal and pushing for it to be finalized by the end of the year.

Germany, in particular, sees Mercosur as a key market for its automakers.

South American leaders, such as
Brazilian President Luiz Inácio Lula da Silvasee the deal as a boon for regional trade and economic expansion.

The deal is also supported by countries like Uruguay and Paraguay, which want to reduce their dependence on China and diversify their trade relations.

Argentine President Javier Milei also backed him, marking a change from his predecessor’s doubts.

The agreement is also supported by industries in both regions.

European car and pharmaceutical manufacturers see it as a way to access growing Mercosur markets.

European Commission President Ursula von der Leyen also expressed her strong support, calling it “an agreement of great economic and strategic importance.”

His support comes despite opposition from some EU member states.

EU countries against the deal

France is the largest agricultural producer in Europe. The country, along with Poland, Austria and the Netherlands, remained staunchly opposed to the deal.

Recently, Italy has also expressed concerns about the possibility of an agreement with Mercosur. The current version of the deal is “unacceptable”, according to Italian Agriculture Minister Francesco Lollobrigida, who last week called for Mercosur farmers to be held to the same “obligations” as their EU counterparts .

The deal has also drawn criticism from environmental organizations like Greenpeace, which fear it will accelerate deforestation of the Amazon and increase the use of dangerous pesticides.

Fearing that competition could halve prices in its main European markets, Ireland, the world’s fifth-largest beef exporter, has also expressed doubts about the deal.

Belgian farmers also protested against the trade deal.

It is, however, unclear whether these countries will follow France and try to block the agreement.

Their concerns

French President Emmanuel Macron called for stricter environmental and labor standards, saying his country “would not sign the agreement as it is.”

The country also asked the European Commission to renegotiate the text, in particular by incorporating “mirror clauses”, which would impose identical standards on products traded between the two blocs.

European farmers, particularly in France, fear that an influx of South American products will saturate their markets, to the detriment of local agriculture. A year after a massive protest movement by European farmers, a new wave of protests has erupted across the continent, with many saying cutting tariffs or duty-free quotas for South American goods could spell doom for them.

For example, 99,000 tonnes of beef would be subject to a reduced tariff of just 7.5 percent, while 180,000 tonnes of poultry would enter duty-free. According to the European Commission, this represents less than 2 percent of the EU’s annual beef consumption.

Breeders say they cannot compete with South American producers, who benefit from lower labor costs, larger farms and less strict regulations on practices such as the use of hormones growth compared to European standards.

Brazil, the world’s largest beef exporter, is unable to guarantee that its shipments to the EU are free of the growth hormone “estradiol 17-β”, banned in Europe for decades, according to an audit carried out by the European Union. Commission in October.

Furthermore, it is relevant to note that France has no power to stop the agreement because the European Commission, which negotiates on behalf of the 27 member states, controls the trade negotiations.

Future price

The Mercosur summit on December 5 and 6 in Uruguay could be a key moment for this agreement.

However, even if it is signed, it must be ratified by all member states, the European Parliament and the national parliaments of all member states before entering into force.

This would give France a chance to veto it.

The European Commission is considering splitting the deal into a trade-focused deal and a broader cooperation agreement to make approval faster and easier.

Under European regulations, the latter would simply require a majority vote, avoiding the need for unanimous consent.

Under this approach, France would no longer have a veto unless it can muster enough support to create a blocking minority.

Although countries like Poland and Austria have expressed their disapproval, their combined influence is insufficient to end the deal.

With contributions from the Associated Press