On November 26, the National Assembly will debate and vote on the ratification of the Mercosur treaty, a long-awaited trade agreement between the EU and South American nations. While some EU countries support the deal to counter China’s trade influence, France opposes it due to concerns over agricultural standards and competition. The treaty aims to reduce tariffs significantly, impacting various sectors, but faces challenges in implementation. The upcoming Mercosur summit in December may determine the treaty’s fate.
The Mercosur Treaty Comes to the National Assembly. On Tuesday, November 26, members of the National Assembly will engage in discussions and cast their votes regarding the ratification of this significant trade agreement between the European Union and the nations of the “mercado comun del sur” (the common market of South America), which includes Argentina, Brazil, Bolivia, Paraguay, and Uruguay. This treaty, which has been in the works for over two decades, aims to decrease tariffs across various sectors, particularly agriculture, automotive, chemicals, pharmaceuticals, textiles, and services. Although the agreement was finalized in June 2019, its implementation has been hindered by a lack of unanimous backing from EU member states.
Within the EU, perspectives on the Mercosur treaty are sharply divided. Countries such as Germany, Spain, Italy, and several Scandinavian nations are advocating for swift ratification, hoping to counterbalance China’s increasing dominance in global trade. Conversely, France is showing resistance to the agreement. However, the upcoming Mercosur summit from December 5 to 7 in Montevideo, Uruguay, could serve as a pivotal moment, potentially providing the EU with the chance to finalize this long-anticipated deal.
The Mercosur Treaty: A Divisive Issue in France: While supported by Medef, the treaty faces significant opposition from agricultural unions, industry experts, and members of the National Assembly. In a rare move, a broad consensus has emerged against this agreement, with around 600 French parliamentarians sending a letter to Ursula von der Leyen, President of the European Commission, on November 12, calling for the complete cessation of negotiations.
Concerns Over the Lack of a “Mirror Clause”
Critics of the Mercosur agreement are urging the inclusion of a “mirror clause”, which would mandate that exporters to the EU adhere to stringent European standards, particularly in agriculture. They raise alarms about the potential for unfair competition, expressing fears that they will be forced to compete against lower-priced products from South America that often escape European production and environmental regulations.
Despite the outcry, France stands out as the only nation firmly opposing the treaty. President Emmanuel Macron stated on November 23 via Public Sénat, “I have been opposing this treaty for seven years, and I talk to our farmers face to face […] And today I tell you, these guarantees are not there for Mercosur. That’s why we will continue to oppose it.”
For the treaty to take effect, it requires unanimous approval from the Twenty-Seven. However, the European Commission may find a way around this hurdle through majority voting. For now, the focus shifts to the implications and content of this free trade agreement.
Trade Dynamics: Wine, Chocolate, and Cheese vs. Beef, Sugar, and Rice
In 2019, the EU and Mercosur nations entered into a political agreement aimed at abolishing over 90% of tariffs between the two regions to enhance trade. South American tariffs on European goods such as wine (27%), chocolate (20%), spirits (20 to 35%), biscuits (16 to 18%), canned peaches (55%), soft drinks (20 to 35%), and olives will be eliminated. Additionally, European cheeses and dairy products will benefit from expanded quotas free of customs duties.
In exchange, South American agricultural products will gain access to the European market at preferential rates within specified quotas: 99,000 tons of beef at a 7.5% tariff per year, which constitutes only a small fraction of Europe’s annual beef production (around 7.8 million tons). There are also quotas for 100,000 tons of poultry, 180,000 tons of sugar, 25,000 tons of pork, 60,000 tons of rice, and 45,000 tons of honey.
While organizations like the Federation of Wine and Spirits Exporters (FEVS) and some players in the dairy sector view this agreement as beneficial, agricultural unions—especially those in the beef industry—strongly oppose it. In light of these concerns, Carrefour and Système U have declared they will not sell Mercosur meat in their French outlets, while Leclerc remains open to these imports.
Is Mercosur a “Meat for Cars” Treaty?
The agreement outlines a gradual reduction of tariffs on various European industrial goods, including cars (35%), spare parts (14 to 18%), industrial equipment (14 to 20%), chemicals (up to 18%), textiles (up to 35%), and pharmaceuticals (up to 14%). This disparity between European industrial products and South American food and agricultural commodities has led many to characterize the treaty as a “meat for cars” arrangement.
The text signed in 2019 also includes a “safeguard mechanism” that allows both the EU and Mercosur to manage imports in the event of an unforeseen and significant influx that could adversely impact their local industries. Furthermore, Mercosur has committed to safeguarding 357 European geographical indications, including Parma ham, champagne, port, and Irish whiskey, while the EU will protect certain South American designations like Brazilian cachaça and Argentine Mendoza wine.
The European Commission asserts that “nothing in the agreement alters how the EU adopts and implements its food safety regulations” for both European and imported goods. The implications of this agreement are substantial: if ratified, it could affect nearly 800 million consumers and generate between 40 and 45 billion euros in trade.