Mercosur: What is and what does the agreement with the EU mean?

The agreement between Mercosur and the European Union is causing strong reactions from representatives of the primary production sector. The agreement between Mercosur and the European Union was voted on, which all representatives of the primary production sector opposed. But what is Mercosur and why are farmers and livestock farmers reacting?

What is Mercosur?

Mercosur is the Common Market of the South, a South American trade bloc founded in 1991. Its members are Argentina, Brazil, Paraguay, and Uruguay. Venezuela joined in 2012, but its membership was suspended in 2017. In December 2012, Bolivia’s accession protocol to Mercosur was signed. It is pending ratification by the parliaments of the Mercosur countries. Together, the Mercosur countries constitute the 6th largest economy in the world with a total population of 270 million. All Mercosur statistics below refer to the four full Mercosur member countries: Argentina, Brazil, Paraguay, and Uruguay.

What does the agreement aim to deliver?

The European Union has been negotiating with the four main Mercosur countries for 25 years with a view to signing the landmark trade agreement, which was concluded today. The EU-Mercosur agreement aims

• remove trade barriers and make it easier for EU businesses to sell goods and services to Mercosur, as well as to invest,
• help ensure sustainable access to raw materials, strengthening our economic security and supporting the dual transition,
• help the EU and Mercosur shape global trade rules in line with European standards, and
• send a strong message to the world in favour of rules-based trade, rejecting protectionism, according to the Commission.

Goods imported and exported between the EU and Mercosur The main goods exported by the EU to Mercosur

• machinery and appliances
• chemicals and pharmaceuticals
• transport equipment

The main goods imported by the EU from Mercosur

• agricultural products
• mineral products
• pulp and paper

Services In 2023 (the most recent year for which data are available), the value of trade in services between the EU and Mercosur exceeded €42 billion. The EU exported services worth over €29 billion to Mercosur, while Mercosur exported services worth around €13.4 billion to the EU.

Which countries voted against the deal?

France, Poland, Austria, Ireland and Hungary voted against it, while Belgium abstained. In addition, European Commission President Ursula von der Leyen is due to travel to Paraguay next week to sign the deal.

What has been secured for European farmers?

Additional safeguards for the agricultural market, which will be triggered if imports from Brazil, Argentina, Paraguay and Uruguay increase too much, have also been approved by EU ambassadors, according to diplomats, who spoke on condition of anonymity.

Why are European farmers reacting?

European producers, however, are reacting to the agreement’s passage, as they believe their own products will “take a back seat.” The EU-Mercosur partnership agreement means that:

• European businesses and small enterprises will find it much easier to do business in Mercosur countries
• European businesses can offer services more easily and cheaper
• European producers (of industrial products and food) and farmers can export more
• European delicacies will sell more and at premium prices