It is a dull, sophisticated, arithmetic battle that has been playing out recently in Brussels. As is often the case in this type of business, you have to know how to seal alliances, twist arms, let go of some concessions. Slam doors too, only to reopen them quietly a little later, so as not to lose face. This battle is that of Mercosur, this free trade treaty negotiated for more than twenty years between the European Union and five Latin American countries, including Brazil and Argentina. The largest trade agreement ever signed by Europeans. A UFO these days the world is so barricaded.
Donald Trump, soon to return to the White House, promises to handle customs duties like a cowboy handles his lasso. China, furious at having new taxes imposed by Brussels on its electric cars, has launched anti-dumping investigations into French cognac, dairy products and Spanish ham. With Mercosur, Europe must not only negotiate with the impetuous Argentine President Milei or his Brazilian sidekick, the strategic Lula: it must also show a united front. However, the 27 were at odds with each other, with the matter even turning into a confrontation between Germany and France. As the text as refined by the Commission stands, Berlin is for it. But Paris is against: “The compensation is still insufficient, particularly in terms of environmental protection,” whispers a minister.
Eleven member states have already sent a letter to Commission President Ursula von der Leyen, urging her to sign the agreement as quickly as possible, before the end of the year. France has therefore embarked on a race against time, with a view to swaying the undecided. To obtain a blocking minority in the European Council – the club of EU heads of state – it must form a group of at least four countries, representing at least 35% of the European population. “We can count on Austria, Hungary and perhaps Ireland. Belgium should abstain, which amounts to voting against. It remains to convince Poland, a major agricultural country, and why not the Countries -Bas whose government coalition only holds with the support of a peasant party clearly hostile to Mercosur It’s playable”, wants to believe a French diplomat at the heart of the negotiations. “Not signing this agreement today would be a major mistake on a geopolitical level. We cannot give in to the collective intoxication of the agricultural lobby,” thunders Pascal Lamy, the former European Commissioner in charge of Trade and ex-director general of the WTO. French farmers are up in arms, threatening to get back on their tractors like last spring. “There is nothing to negotiate. It is the very spirit of this free trade agreement that we reject en bloc. A question of values”, insists Arnaud Rousseau, the president of the FNSEA, the powerful trade union. campaigns.
So, info or fakery? To clear the fog, we need to get back to the numbers. Mercosur is a gigantic market of nearly 300 million consumers with which Europe certainly displays a trade surplus, but less and less consistent over the years. Europe exports its machine tools, medicines, luxury products and sedans to Mercosur, and mainly imports agricultural products. Except that over the last twenty years, the market share of European products in the area has been halved, going from 35 to 17%. Latin agricultural imports have made a formidable breakthrough. From there to fear a tidal wave of Argentinian chickens and Brazilian steaks…
There is no question of leaving the continent’s doors wide open, we argue at the European Commission. For the most sensitive sectors, tariff quotas have been set: each year, 99,000 tonnes of beef, 180,000 tonnes of cane sugar and 180,000 tonnes of poultry will be able to dock in Europe without paying customs duties, or Lilliputian ones. . Beyond that, the usual taxes will apply. Magnificent volumes on paper. But the Brazilian beef quota represents barely 1% of European annual consumption. Just 1.2% for sugar. “The problem is the accumulation of all the tariff quotas, Mercosur adding to those already given in other free trade agreements. This is the last straw,” worries Marie-Christine Ribera, the director general of the European Sugar Manufacturers’ Committee.
The mirage of mirror clauses
An argument that the European Commission brushes aside. In the case of the beef quotas granted to another country, Canada, the latter did not even use them because the health standards imposed in the EU are so strict that Canadian breeders did not try to create a sector of hormone-free beef to break into the European market. Above all, the Commission would have given itself a rule: in these famous sensitive agricultural sectors, never exceed a threshold of products imported without customs duties – all agreements combined – greater than 4% of the EU’s annual consumption.
“It’s not a question of tonnage but of production conditions,” annoys Arnaud Rousseau. In short, the big gap in terms of standards on animal welfare or on the use of such fertilizers or pesticides. Almost three-quarters of the phytosanitary products used for corn cultivation in Brazil and Argentina are banned in Europe. “The production costs of Brazilian farmers are half as high as ours. Impossible to be competitive,” laments Franck Laborde, president of AGPM, the General Association of Corn Producers. To try to calm agricultural anger, France is trying to brandish the magic card of mirror clauses: nothing will enter Europe if it is not produced under the same conditions as those imposed on European farmers. Nice on paper. Illusory in reality.
“How do you expect these countries to accept such conditions when we have just opened the European market to them, by imposing strict tariff quotas? The Brazilians are laughing in our faces,” confides Jean-Luc Demarty, the former boss of the Directorate-General for Trade at the European Commission. When they don’t get seriously annoyed. “Two strategic partners do not discuss through threats, but through proposals,” launched President Lula Da Silva, last December, during a visit to Brussels.
A strategic issue
In the meantime, if European farmers are sorry, industrialists are rubbing their hands. Automobile manufacturers, in particular, who see the possibility of continuing to sell thermal engines there, soon to be banned in Europe… “It is a strategic agreement from the point of view of the economic security of the continent. We must reduce our dependence to China which is tense and whose market is shrinking”, explains Elvire Fabry, researcher at the Jacques Delors Institute. Access to Brazil or Argentina also means the possibility of benefiting from the vast reserves of raw materials essential for the energy transition. Brazil alone holds 20% of the world’s reserves of graphite, nickel and manganese. Argentina is full of lithium. “We must not fall into the trap of this argument. If Mercosur is indeed a geographical area rich in minerals, the agreement itself does not include specific provisions on this subject”, tempers Sophie Primas, the delegate minister to foreign trade.
The fact remains that behind the mishmash of trade flows, the issues are also geopolitical. All the markets that are not taken by Europe will be won by China, which will take advantage of this to further increase its influence, argues a French diplomat. So, in the home stretch, as a possible condition for joining, France is trying to include respect for the Paris agreement in the treaty. An “essential clause”, which would allow everything to be stopped in the event of a violation. After all, New Zealand, with which Europe has just signed a trade agreement, has complied with the rule. Not sure that Argentinian President Javier Milei, a self-confessed climate skeptic, will do so. Of course, either, that the totem of the Paris agreement is enough to calm French farmers.
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