South America’s agricultural sector, the source of much of the world’s food production, welcomed Mercosur and the European Union’s announcement on Friday of a free trade agreement, although its leaders said they were also interested in the fine print. of the agreement.
The agreement was signed in the Uruguayan capital, Montevideo, in the presence of the president of the European Commission, Ursula von der Leyen, and the presidents of Argentina, Uruguay, Paraguay and Brazil, the four member states of the South American bloc, after 25 years of negotiations.
South American farmers and exporters are excited about unrestricted access to the huge European market. However, fears that environmental clauses will limit trade and the opposition of some EU countries to the agreement dampen expectations.
“Any market opening is favorable, I think it is an opportunity, but we have to see the fine print, what the conditions are,” said Carlos Castagnani, president of the Argentine Rural Confederations (CRA), one of the largest agricultural associations in the country, to Reuters. “We will have to analyze the agreement point by point and work with the different points of view”, explained the rural director of the third largest corn exporter in the world. “We have to ensure that our way of producing is respected,” he said.
Part of the differences between the blocks arises from environmental and social demands made by Europe, such as limits on the use of genetically modified seeds and deforestation, common practices in South America in recent decades and linked to the advancement of agricultural production.
The Argentine chamber of grain exporters and processors Ciara-CEC highlighted that, although the agreement was a positive step for a trading bloc that has struggled to reach free trade agreements, its real impact will not be immediate.
“The tariff reduction schedule agreed with Europe means that products from the cereal and oilseed complex, especially products such as oil and biodiesel, will not have significant reductions until the seventh or tenth year,” said the president of Ciara-CEC, Gustavo Idígoras, to Reuters.
Argentina is the world’s largest exporter of soybean oil and meal and, for more than a decade, the world’s largest supplier of biodiesel — a sector whose activity was hit hard by protectionist measures in Europe.
The document now needs to be legalized, translated and approved by member states and could even be blocked, with France as its fiercest opponent.
For South America’s competitive agricultural sector, the treaty is “very important” at a time when the world’s main economies are threatening to close down, according to Pedro Galli, head of the Rural Association of Paraguay, one of the main global soy exporters. .
However, Héctor Cristaldo, president of the União de Grêmios da Produção, the main association of soybean producers in Paraguay, explained that “we are waiting for the text first to deepen the analysis, it is a step that has been taken, but… parliaments have to approve it is a complex process”
