While the agreed EU-Mercosur trade deal includes a commitment to provide financial compensation to EU farmers in case of market issues, the European Commission does “not intend” to use this tool, sources within the commission have said.
The EU reached a political agreement with the four founding members of Mercosur, Argentina, Brazil, Paraguay, and Uruguay, last week. However, this is only the first step in the process towards conclusion of the agreement.
While the agreement opens up the EU market to goods from Mercosur, it limits imports from Mercosur of “sensitive agricultural products” such as beef and poultry.
Besides these quotas, a bilateral safeguard clause can be applied in case increased imports from Mercosur cause or threaten to cause serious injury to the relevant EU sectors. This would allow for the temporary withdrawal of agreed tariff preferences.
In a situation in which all agreed safeguards are not enough to avoid market issues, there is a commitment to provide financial compensation to farmers. However, sources within the commission consider such a situation “almost impossible”.
Details of any compensation, however, have yet to be worked out. Sources within the commission said it does “not intend” to use this tool as it is convinced that the other systems agreed are sufficient to protect the market of sensitive agricultural products.
Mercosur import quotas
The trade deal will open “unprecedented access” to the countries of Mercosur and its 284 million consumers for European farmers and food producers, granting “very limited access” to the EU market for sensitive products like beef and poultry.
The agreement does not give duty-free access to Mercosur beef. It will allow 99,000t of Mercosur beef to enter the EU market with a 7.5% duty. The quota will consist of 55% fresh or chilled meat and 45% of lower-value frozen meat.
This agreed quota, which considers all four Mercosur countries, represents 1.6% of total European beef production, according to the commission. In 2023, beef imports from Mercosur stood at 196,000t.
Overall, the EU is a net exporter of beef, with €4.6 billion of total exports in 2023, almost double the total EU imports. Mercosur produces more than 10 million tonnes of beef every year, but exports to the EU represent a “tiny fraction” of that.
The EU will allow a quota of 180,000t of poultry to be imported duty-free, which will be phased-in over five years. This quota represents 1.4% of total EU consumption and is lower than current imports from Mercosur at 240,000t in 2022.
Next steps
The agreed text is expected to be published this week, following which it will undergo legal scrubbing and will be translated into the 24 languages of the EU. Only after this, the text will go before the Council and the European Parliament.
Sources within the commission said that these steps, as well as the preparation of the proposal, could take six to eight months. However, the Council and the Parliament will then decide how long they need to discuss the matter.
The negotiations on a trade deal between the EU and Mercosur were launched in June 1999. Following a suspension of talks, negotiations restarted in 2010 and negotiations concluded in 2019 following new offers to cut tariffs.
In addition to the 2019 text, the Paris Agreement will be essential to the EU-Mercosur relationship, and the deal will ensure concrete commitments to halt deforestation after 2030. The quota for agricultural products remained unchanged.