The Government’s explanations about the trade agreement between the European Union and Mercosur (Brazil, Argentina, Paraguay and Uruguay) do not convince farmers. The Executive met this Thursday with agricultural organizations and agri-food cooperatives to detail the content of an agreement that the Executive sees as a “great opportunity” to export products to the other side of the Atlantic. However, Asaja, COAG, UPA and Unión de Uniones do not share the optimism and consider that the countryside is the biggest loser and has been used as a “bargaining currency”. Agricultural organizations are considering mobilizations in the first quarter of 2025 if the processing of the agreement continues and Spain maintains its support.
The main obstacle to the discrepancies between the Government and agricultural organizations is the fear of the countryside that the massive entry of products from Mercosur produced at a lower price will collapse the European market. “In theory, for the Government of Spain the agreement is going to be very beneficial. We do not agree at all with that statement,” said the state coordinator of the Union of Unions, Luis Cortés. “What we are not willing to do is allow products to enter the European Union on a more favorable basis to third-party producers than to those we produce here,” he added. “We are not demanding privileges for European agriculture, We are asking that we be equal, that we compete on equal terms,” he claimed.
The associations warn that producing on the other side of the Atlantic costs less and health standards are also more lax. The Executive highlights that the agreement to lift tariffs on both sides of the Atlantic does not modify the requirements regarding food safety and that all merchandise entering the EU must comply with community regulations. “What we convey to our government is that controls be increased and that any product that does not fall under the same production conditions who force us to produce back down,” claimed José Manuel Roche, Secretary of International Relations of UPA.
The positions do not seem to have gotten closer. “There has been no big news at this meeting. We already know the treaty because it is basically the one that was approved in 2019,” José Luis Miguel, technical director of COAG, assessed at the end of the meeting. “It is a trade treaty that is of interest to the European Union for geopolitical reasons, industrial sectors, services…. but agriculture has been used as a bargaining chip,” he lamented. “We have stated that we continue to maintain this opposition to the agreement, we ask the Spanish government not to ratify it, to reject this agreement and we will do what is in our power to get it not approved,” he added.
In the configuration of these new trade rules, the Government recognizes the “sensitivities” of the Spanish countryside, which views competition with other large producers such as the signatory countries with suspicion. Executive sources emphasize that the agreement has been “carefully” designed to protect more sensitive products, such as beef and poultry, sugar, honey, ethanol and rice. To avoid a massive entry into the EU of foods of this type grown in Mercosur, the trade pact includes quotas that limit tariff-free imports. For example, tons of beef are restricted to 99,000 that can enter the EU with tariffs cut, to 180,000 for poultry and 60,000 for rice.
The Government emphasizes that these amounts represent only between 1% and 2% of European consumption of the respective products, so they rule out that they could lead to a collapse in prices. In any case, they emphasize that there are also additional safeguard clauses that would be activated if an excessive increase in imports of these products is detected, preventing the entry of more merchandise. They recall that in addition, the European Commission has committed to creating a fund of 1,000 million to ultimately compensate for possible losses to the European countryside due to a possible drop in production. “There has to be compensation, because there will be a very important loss of income of our farmers due to the unfair competition from third countries that we are going to suffer,” Cortés claimed in that sense.
However, streamlining the trade flow with Mercosur is not expected to have the same impact on all products. The Government points out wine and olive oil as the great beneficiaries of the trade agreement, given that the large producers in this case are located in the Old Continent – among them Spain – so it is sold to the other side of the Atlantic. much more than what is bought. “They can be a spearhead for other products,” say government sources, who also indicate as favorable the possibility of importing cheaper soybeans to supply farms.
ANDThe Executive sees the agreement as an “unprecedented opportunity”by eliminating tariffs on a good part of the products that are exported from the EU to Brazil, Argentina, Paraguay and Uruguay, thus allowing them to sell in this region in a ‘cheaper’ way. In return, a good part of the flow from the other side of the Atlantic to the Old Continent is also liberalized. Specifically, the EU has liberalized 82% of its tariffs, compared to 93% for Mercosur. Government sources value the fact that the pact has been reached at a time when there is a commercial trend in the opposite direction towards market fragmentation and point out that it represents a “milestone” for both blocks. They estimate that it will increase European exports by between 50% and 75% and those of Mercosur by 11-12%.
These arguments do not convince the field, which threatens to call protests after Christmas if the agreement goes ahead with the support of Spain. “We do not rule out mobilizations. I do not know if in January or February it is not finalized, but it is certainly in the spirit of Asaja that they exist,” warned Pedro Barato, president of Asaja.
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