The EU-Mercosur Agreement, signed in 2019 but not yet implemented, is designed to give a significant boost to annual trade worth billions of euro in goods and services between the EU and South American countries Brazil, Argentina, Uruguay and Paraguay.
It is the biggest trade deal ever negotiated by the EU and has the potential to see import tariffs of more than €4 billion a year being cut on EU trade with the South American economies, giving a boost to the European car manufacturing and other sectors.
However, the deal has provoked sharp opposition from farmers and environmentalists in the EU because it involves opening the European market to cheaper South American agricultural products – including 99,000 tonnes of beef every year. Ireland, which exported 450,000 tonnes of beef in 2021, according to the Central Statistics Office, is among the member states most opposed to the current proposals.
For farmers, the focus is on the costs associated with their having to comply with environmental, tracing, animal welfare and other laws and regulations which, they argue, their South American competitors will not have to comply with. For environmentalists there is the fact that South American beef production is associated with the clearing of the Amazon rainforest and lower and less-well implemented environmental safeguards generally.
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The prospect of an Argentinian steak being sold in a Parisian supermarket for half the price of an Irish one is a big issue for Ireland, which exports 90 per cent of its beef, and is the fifth-largest beef exporter in the world.
While often the target of Irish environmentalists, the carbon footprint of an Irish steak is already lower than a South American one – and that is before they are transported halfway across the world to the European market.
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On the other side of the scale, there is huge, ongoing trade between the two blocs, with the EU being the Mercosur countries’ largest trade and investment partner. The European Commission argues that the deal represents a “win-win” for both sets of countries, creating opportunities for growth, jobs, and sustainable development.
It says the deal will strengthen worker’s rights, fight climate change, increase environmental protections, encourage companies to act responsibly and uphold high food safety standards. Sceptics ask whether new standards will be implemented with the same rigour in South America as they might be in Europe.
Fianna Fáil and Fine Gael have both expressed opposition to the deal as it stands. Former Green Party leader Eamon Ryan said earlier this year, during a visit to Brazil, that it was important the union did not cause deforestation outside of the bloc through its own trade policies. However, he also said it was “not impossible” that the deal could be altered to the satisfaction of both sides.
“What we don’t want is to go into a protectionist world where Europe, America, China, Latin America and the rest of Asia end up in a trade war which won’t allow us to make the leap we need to make to what is a new economic system,” he said, referring to the transition from fossil fuel dependency.
The embattled French president, Emmanuel Macron, is a strong opponent of the deal as it stands
It took 20 years for the 2019 deal to be finalised, and it remains unimplemented. The recently re-elected European Commission president, Ursula von der Leyen, who flew to South America on Thursday, said the “finish line” was now in sight, before it crossed the line on Friday afternoon. “Let’s work, let’s cross it. The largest trade and investment partnership the world has ever seen. Both regions will benefit,” she wrote in a post this week on X.
There have been suggestions that the commission may favour splitting the agreement so that the trade elements would only require approval by the European Parliament and European Council rather than national parliaments. Non-trade-related elements, such as an agreement on political co-operation, would still be ratified by national parliaments.
Here the big parties have expressed opposition to the deal “in its current form”, while Independent Ireland, which has four TDs, has said it will oppose Mercosur “in any form” and the eight-TD-strong Regional Group of Independents, which may end up having a role in the new government, has yet to discuss the matter.
The embattled French president, Emmanuel Macron, is a strong opponent of the deal as it stands. Poland, Austria and Denmark have also expressed strong opposition, but the failure to implement it would be a significant development in a world where the re-election of Donald Trump as US president and the deterioration of relations between China and the West have created fears for global trade. Failure would also have geopolitical implications, some observers say, weakening South American links with Europe and boosting its links with China and the Indo-Pacific.
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