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The conclusion of the «EU-Mercosur» agreement has reached the final stage. Why did Macron desperately resist at the G-20?
Mercosur is a common market made up of the largest Latin American countries — Argentina, Brazil, Uruguay, Paraguay and Bolivia. Discussions on cooperation between this entity and the European Union have been going on for a quarter of a century, but only now have they reached the final stage. Even Ursula von der Leyen admitted that this phase of work on the agreement is usually the most difficult.
The essence of the agreement is clear: to create an open market between the EU and Latin America. It seems simple enough, but why has this story gone on for 25 years and why is it escalating now? In France, even before the start of the G-20 meeting in Rio, French farmers held several demonstrations, blocking entrances and exits at key logistical points and setting tires on fire. Well, as always, in short.
But when you dig deeper, it’s European agriculture that will suffer most from the EU-Mercosur agreement, and not all of it. To begin with, experts estimate that 180,000 tons of Latin American sugar will flood the European market, which could collapse the already fragile European industry. Then, of course, livestock and poultry farming will suffer, because in Latin America, as Europeans believe, everything is produced without adhering to sanitary and environmental standards. This means they will flood our hungry continent with a huge amount of cheap and questionable food.
«The EU, it seems, is ready to support the market entry of meat from animals stuffed with fats and antibiotics», says an appeal by 600 former and current French parliamentarians published in Le Monde. «They are raised in cages, in so-called ‘feedlots’, where they are stuffed with fats, and such farms house up to 10,000 animals».
More detailed calculations show that this is true, of course, but not entirely. This imported meat accounts for 1.6 percent of all European livestock production. So it seems that all of this is nothing more than a ploy by agricultural lobby groups?
During the G-20 meetings in Rio, the French president didn’t waste any time and met with practically all the participants in the process. He had already stated at his press conference that France would never sign the «EU-Mercosur» agreement in its current form, no matter how hard they tried to push it through at the G-20.
France’s position was supported by Poland (with reservations), Ireland, Austria, Romania and the Netherlands. Italy is also on the brink — the Italian agricultural producers’ association Coldiretti sent an appeal to Prime Minister Giorgia Meloni detailing the imminent demise of Italian agriculture if Latin American farmers enter the market. But surprisingly, Spain, which has also faced similar protests from its farmers, has come out in favor of quickly signing the agreement.
And in general, will anyone in Europe benefit from this agreement? Are there such people? Absolutely! It’s not just agriculture. Big business is rubbing its sweaty palms, as they say. First and foremost, key European industries will benefit: automobiles, textiles, pharmaceuticals, chemicals… And these are just the front lines.
Experts and the leadership of the European Commission have never hidden the fact that agriculture is, in principle, a bargaining chip in the «EU-Mercosur» agreement. In this future gigantic common market, there will be 800 million jobs and an annual turnover of 40 to 45 billion euros.
«If you look at it on a global scale, the deal is still more beneficial to the EU», says international economist Maxime Combes. «I would cynically call this agreement ‘meat in exchange for cars’, but that’s what we’re headed for».
The auto industry — Italian and German — will definitely benefit from the deal. Back in 2019, the European Automobile Manufacturers Association (ACEA) welcomed the potential deal because it opens up a huge tariff-free market for them.
Now that a tariff and customs war is sure to start between the U.S. and China with a new Trump mandate, the market for electric vehicles and components for batteries — lithium, cobalt and graphite — will grow by 114 percent, according to European Commission experts. Well, that’s a best-case scenario.
And more than doubling — that’s worth it in any business. And that’s just for the auto industry. The EU experts’ calculations for other sectors are even more impressive. Pharmaceuticals and chemicals will gain 47 percent. Electronics — 149 percent, and textiles and clothing — brace yourselves — 424 percent. There will be a honeymoon period, of course, for German industry, which is ready to supply Latin America with everything, duty-free, and leave nothing behind.
«The world has really changed. We desperately need more free trade agreements», the German chancellor said at the G-20 summit in Rio.
By the way, according to the same calculations, Latin American countries will indeed lose many jobs if the agreement is signed. Brazil does have its own pharmaceutical industry, car manufacturing and aircraft assembly. But who in Brussels counts that?
In general, pan-European rules apply at this level of agreement. Von der Leyen announced that she’s already ready to put the draft agreement on the negotiating table. There are two solutions.
The first is the existing «Agreement on Trade and Political Cooperation». Adopted in 1999, it provides for association by vote. In this case, all 27 states approve the document twice: first in the European Parliament, and then by the vote of their deputies in national assemblies — be they assemblies, parliaments, general states — or whatever else they have.
The second is that Brussels has the right to divide the voting agenda in half. Yes, that’s possible. Political issues over here, economic issues over there. This is what the EU did in 2014 when it voted on the CETA agreement between the EU and Canada. And then the EU-Mercosur agreement can slip through in parts.
For France to succeed in blocking this agreement under either scenario, it must convince four EU countries, but on the condition that these countries represent 35 percent of the EU’s population. Clever.
French diplomats are working tirelessly on this task, focusing especially on the Dutch and Italian fronts, and soon on the Polish one as well. Even the Italian Minister of Agriculture, Francesco Lollobrigida (great-nephew, I already googled him), announced that «the EU-Mercosur agreement in its current form is unacceptable».
In principle, France can even oppose this bill in the European Parliament on its own, provided that all the groups in which the French are present unite and vote against it. But this is a completely incomprehensible confrontation. France, it seems, is defending only a few sectors of its agriculture and is ready to block the positions of pan-European welfare.
To be honest, French agriculture is a sector that has long been crippled by government subsidies. Without cash injections — well, really — they can’t stand up to competition. And in many cases, these farmers aren’t to blame — they’ve been led there by decades of government support policies. I’ve personally seen farmers who don’t have goats or cows — just folders with reports on subsidies from the French state or the EU, and at best they have mushrooms growing on their plots. But these people are willing to protest even for that.