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05/12/2016

Farmers: Mercosur deal will hit EU agricultural exports ‘tremendously’

Agriculture & Food

Farmers: Mercosur deal will hit EU agricultural exports ‘tremendously’

EU farmers are concerned about recently re-launched trade negotiations with Mercosur trade bloc, claiming that European agricultural exports will be negatively affected.

In an effort to unlock long-stalled free trade negotiations dating back to 2004, the EU and Mercosur exchanged on Wednesday (11 May) offers concerning access to their respective markets for goods and services, and government procurement.

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Mercosur is a regional bloc which consists of Argentina, Brazil, Uruguay, Paraguay as well as Venezuela, which is not currently participating in the negotiation. Uruguay is currently leading the negotiation with the EU .

After twelve years of stalled negotiations, the state of play in the global agricultural market has significantly changed, with countries like Brazil dominating as a net exporter.

Just like the EU, Brazil has been heavily investing public funds in increasing its production.

On the other hand, slowing demand from China, and the Russian embargo on food products have put extreme pressure on EU agricultural exports.

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The “sensitive” products

Copa-Cogeca, the European farmers and agricultural cooperatives association, believes that the executive’s offer on agriculture is problematic as “it opens up EU’s markets to imports without getting much in return”.

EU farmers are particularly concerned about “sensitive” products such as beef and poultry.

In April, twenty EU ministers warned the Commission against making an offer on agriculture, which includes sensitive agriculture products in the free trade talks with Mercosur.

“Despite this warning […] the Commission has gone ahead with the move,” Copa-Cogeca stressed in a press release.

European farmers want all the sensitive products to be excluded from the executive’s offer. EurActiv.com has learned that beef and ethanol are out, but other sensitive sectors like poultry, cereals remain in.

EU farmers warn that the inclusion of sensitive products could destroy the agriculture sector before any clarification was made in terms of removing “red tape and other unnecessary non-tariff barriers to trade” which prevent EU exports from entering these countries.

EU exports under threat

Mercosur is already a major exporter of agricultural commodities to the EU, with 86% of beef imports and 70% of poultry imports coming from these countries.

Copa-Cogeca’s Secretary-General, Pekka Pesonen, told EurActiv that Mercosur was not a complete single market, which “would limit the EU’s agricultural export potential tremendously”.

He explained that the EU agriculture sector is already in a serious state of crisis. Referring to a Joint Research Center’s study, he noted that the sector risks losing another €7 billion from such a deal.

Environmental standards

Pesonen noted that there were also concerns on environmental standards.

“We would have to export to each country separately and comply with different trade rules and marketing standards and different environmental standards,” he said,

Copa-Cogeca claims that there are still concerns about safety aspects of meat production in Latin American countries such as traceability and the use of antibiotic growth promoters.

Drugs like hormones and growth promoters are illegal in the EU, but are being used in some Mercosur countries and EU farmers’ association believes that there is no system of recording the use of drugs or monitoring withdrawal period on farms.

Commission needs time

The EU executive considers the resumption of the negotiations a necessary step to move the process forward and successfully restart talks towards a comprehensive, ambitious and balanced deal.

A Commission spokesperson told EurActiv said that both sides would now examine the offers with the view to holding further discussions this year.

“We are not going to comment on both offers before we had a chance to analyse the detail. Twelve years after the previous exchange is a long time and we need to analyse the figures carefully,” the official said.

A chief negotiators’ meeting will be held before the summer break in order to take stock of the negotiation and to prepare a schedule of meetings for the second semester of the year.

“The EU is fully committed to this negotiation. With the exchange of market access offers the EU and Mercosur reaffirm their commitment to an ambitious and balanced agreement,” the spokesperson stressed, adding that the EU offer reflects what the Commission considers adequate at this stage of the negotiating process “after having consulted member states”.

Background

The EU is currently negotiating a trade agreement with Mercosur as part of the overall negotiation for a bi-regional Association Agreement which also cover a political and a cooperation pillar.

Mercosur is composed of Argentina, Brazil, Paraguay, Uruguay and Venezuela, while Bolivia is in the process of accession.

The objective is to negotiate a comprehensive trade agreement, covering not only trade in industrial and agricultural goods but also services and establishment and government procurement, and the improvement of rules inter alia on government procurement, intellectual property, customs and trade facilitation, technical barriers to trade.

The EU is Mercosur's first trading partner, accounting for 20% of Mercosur's total trade in 2013. EU-Mercosur trade in that year was €110 billion.

Mercosur is the 6th most important export market for the EU (2013 data).

Mercosur's biggest exports to the EU are made of agricultural products (43% of total exports) and raw materials (28%), while the EU mostly exports manufactured products to Mercosur and notably machinery and transport equipment (46% of total exports) and chemicals (22% of total exports) [data of 2013].

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