Analysis Feature
Mercosur deal finalized, but ratification uncertain
The Mercosur deal is almost finalized. The European Commission has reached an agreement with Brazil on the conditions. However, it is far from certain whether the treaty can actually count on a majority. The European Parliament and the member states still need to vote on it, and several countries are uncertain about their position.
The consequences for the European agricultural and food sector are significant if the ratification takes place. The agreement stipulates that import tariffs for poultry meat will decrease significantly. The quota is set at 180,000 tons. Tariffs for beef will be reduced for 99,000 tons. It will become easier for Europe to export cars, medicines, wine, and cheese, among other products. Additionally, the trade quotas for corn will increase by 1 million tons and sugar by 190,000 tons.
Tension
In practice, most of the work has been done. However, it is uncertain whether the treaty will actually come into effect. France is still looking for enough support to oppose the ratification of the treaty. At least three member states representing a total of 35% of the European population are needed for this. Due to the market impact, several countries are still hesitant about ratification. A few weeks ago, it seemed that the country could not find a majority, but now more member states have expressed doubts about the treaty. France has reached out to Austria, Belgium, Italy, the Netherlands, and Poland. These countries have indicated that they can align with the French objections, but it is not yet clear whether they will vote for or against the treaty. Ireland is also a potential obstacle, although the criticism in that country is less explicit. The country acknowledges the risks for its beef sector but remains cautious.
Dutch Parliament wants the Netherlands to vote against
The Dutch Parliament called on the government in a motion to reject the trade agreement. Allegedly, the coalition is divided. While the VVD supports the trade agreement, the BBB, PVV, and NSC are against it. Minister of Foreign Trade Reinette Klever has not yet given a definitive answer. The minister states that the treaty has pros and cons and that the government will only make a judgment once they have read the precise content of the treaty.
Safeguard Mechanism
To reassure the market, a safeguard mechanism will be added to the treaty, according to European Commission President Ursula von der Leyen. This mechanism will be activated if significant problems arise for the European meat sector. European farming organizations are not reassured. CopaCogeca, the farmers' union, opposes the trade agreement. LTO is also against it and believes that there are insufficient guarantees for a level playing field in areas such as animal welfare, sustainability, and labor criteria. "Sensitive sectors such as beef, poultry, sugar, ethanol, and rice are at a higher risk of market saturation and income loss due to the influx of cheap products from Mercosur countries," said LTO.
