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EU-Mercosur trade agreement

Portugal’s push for the EU-Mercosur agreement is excellent news for consumers

The EU should finally start embracing free trade...

On January 1st, Portugal took over the EU’s rotating presidency and has already signalled its willingness to push for the EU-Mercosur agreement. Portuguese Foreign Minister Augusto Santos Silva said that Portugal will finalise the EU-Mercosur free trade agreement process, which began in June 2019 when the EU Commission agreed on the deal with the South American bloc.

With France and Ireland’s vocal opposition to the treaty, that is going to be an uphill battle. If Portugal succeeds and speeds up the EU-Mercosur FTA ratification process, it will be a turning point for the EU trade policy. The EU must step up as a global champion for free trade in order not to find itself at the back of the queue for prosperity. The era of protectionism must come to an end, and the EU-Mercosur agreement is our momentous chance to move the needle towards more freedom and more consumer choice.

If ratified, the FTA would establish the largest free trade zone the EU has ever created, covering a population of over 780 million, and consolidate the close political, economic and cultural ties between the two regions. The benefits will be enormous both for the EU and the Mercosur region, namely, Brazil, Argentina, Uruguay, and Paraguay.

The fears raised by farmers across the EU are highly exaggerated. For instance, in 2017, the EU produced about 15.0 million tonnes of poultry meat. Under the EU-Mercosur FTA, only 180,000 tonnes of poultry from the Mercosur would be allowed to be imported tariff-free. The numbers and rates are different and do take into consideration the state of food production in the EU. Therefore, seeing the deal as a dark hour for the agricultural sector in the EU is unjustified.

Ireland, for example, has been consistently claiming that the deal would hurt the beef sector, which couldn’t be farther from the truth. According to the Agreement in Principle, Mercosur bloc would only be able to export 99,000 tonnes of beef into Europe annually, with an average tariff of 7.5 per cent. Ireland alone produces 520,000 tonnes of beef annually. The opposition, therefore, seems to be ideological and political rather than economic. Protectionism benefits a small interest group at the expense of the rest of society — in this case, the beef sector. Should the EU act on those whims — which would be irrational from the data at hand — consumers will have to foot the bill.

On the environmental side of the equation, Santos Silva also stressed that the EU “cannot use environmental issues as a screen behind which to hide,” and that “as long as the environment is not a real reason, but a pretext (…), we cannot accept it.” And rightfully so. The EU’s trade policy has become less about free trade and the benefits it brings in the form of more consumer choice and more as a tool spreading its own green agenda. Plus, the facts at hand prove that the EU’s Amazon forest arguments against the EU-Mercosur agreement don’t stand up to scrutiny.

While the number of fires in Amazon rainforest in 2019 was indeed 80 per cent higher than in 2018, it was just 7 per cent higher than the average over the last 10 years. Moreover, most fires have taken place on already deforested land in the Amazon.

Overall, Portugal presidency’s key message which is “more trade” should excite us since there is now a strong voice for the EU-Mercosur FTA to counterbalance France and Ireland’s attempts to block the deal. In order to successfully rebuild the world after the pandemic, we should use the values of international cooperation, free trade, and consumer choice as our guidance. It is high time the EU emerged as a global advocate for those.