Leaders of the South American bloc meet in Montevideo with the presence of the president of the European Union government
The 65th Mercosur Summit begins this Friday (Dec 6, 2024) in Montevideo, Uruguay, surrounded by the expectation of the conclusion of a free trade agreement negotiated 25 years ago between the South American bloc and the EU ( European Union).
The expected announcement gained momentum on Thursday (Dec 5). The EU head of government acts as the main negotiator of the agreement on the Old Continent – despite public resistance from central players in European agricultural policy, such as France and the Netherlands.
Von der Leyen is expected to meet with the leaders of the South American bloc on Friday morning, before the meeting begins. The idea is for the agreement to be announced at the beginning of the event. Members of Mercosur:
- Brazil;
- Uruguay;
- Argentina;
- Paraguay;
- Bolivia (which is in the accession process).
Venezuela is also part of the bloc, but has been suspended since 2017 and has not participated in any discussion.
“IN SIGHT” AGREEMENT
Upon arriving in Montevideo, von der Leyen emphasized the final steps of the negotiation. On (formerly Twitter), said the deal was “in sight” and would mark the foundation of a market of 700 million people. “It will be the largest trade and investment partnership the world has ever seen”he stated.
Even if the negotiations are concluded, however, it will still be necessary to agree on details for the final text to be signed. The agreement must be legally reviewed and translated into all languages of the 2 bloc countries. This will not be ready until early 2025.
BUT THERE IS A NEED TO COMBINE WITH THE FRENCH
Part of the French government and the country’s agricultural sectors vehemently reject the free trade pact between the EU and Mercosur. The agreement, negotiated since 1999, eliminates the European bloc’s tariffs on 92% of imports from the South American bloc within 10 years.
The President of France, Emmanuel Macron, was emphatic in signaling his annoyance. and violates French agricultural sovereignty.
Internally, Macron’s government is going through a moment of instability. The prime minister was overthrown and he is also demanding his resignation. Chasing the powerful French agricultural lobby is a problem Macron wants to avoid.
French farmers have already held several protests to pressure the government and the European Commission not to sign the agreement. They claim that competition with South American producers would generate a “unfair competition”as these products are not subject to the strictest environmental and sanitary measures in Europe.
According to the sector, Mercosur’s lower-cost production creates an unfavorable market for local farmers. Under the terms of the treaty, 81.8% of what the EU imports from Mercosur will have tariffs zeroed in 10 years.
On Thursday (Dec 5), farmers linked to the Peasant Confederation union blocked the entrance to the Paris Stock Exchange in protest. They accuse investors of being the only ones to benefit if negotiations are concluded.
While the Mercosur-European Union agreement is being debated in Uruguay, in France farmers demonstrated today against the agreement. French farmers are those who have most opposed the agreement that is detrimental to their development. Several are also opposed…
— Marco Tegengi (@Marco_Teruggi)
THE NEXT STEPS
After signing the agreement, von der Leyen will need to submit the text to the European Parliament. Mercosur diplomats estimate that there would be a great chance of the agreement being approved in the European Parliament because there are coalitions of interests from different parties and countries.
But before being submitted to Parliament, the text must pass through the European Council, made up of the 27 countries that make up the bloc. There is controversy regarding whether this step is mandatory. The fact is that it has been followed in different agreements.
It is expected that this will be the case in the case of the signing of an agreement between Mercosur and the EU, even if it is an option by the European Commission to give greater political legitimacy to the process. Council approval from a qualified majority of 15 countries may be required.
The assessment of Mercosur diplomats is that the chances of approval would be favorable to the agreement in the Council. But opposing EU countries could impose a minority blockade. 4 countries with 35% of the bloc’s total population are needed for this.
Poland, the Netherlands and Austria tend to follow France’s blockade. This would form the number of countries needed for the blockade, but would be insufficient in population. There are chances that Italy will also participate. In this case, the criterion of 35% of EU inhabitants is met even if the Netherlands or Austria do not participate in the group.
European diplomats estimate that it will not be easy to form the blockade. In fact, the lobby against the agreement is strong. French farmers lead opposition to the negotiations. But there are also many people in favor of the agreement in several countries, especially in industrial companies. The diplomats’ assessment is that this other, silent lobby has a chance of making their interests predominate. This could prevent Italy, for example, from participating in the minority blockade.
One argument in favor of the agreement is that there is a risk that some European countries will face low growth and even recession in the coming years. The solution to this would be to expand trade with other countries. Mercosur is a relevant market. Some politicians are also sensitive to the risk of recession and may be convinced by company representatives about the importance of the agreement if it is signed by the EU and Mercosur.
