After a heated European summit, Commission President Ursula von der Leyen was expected to board a plane to Brazil on Saturday, to celebrate victory after more than a quarter of a century of negotiations and to put her final signature on a trade agreement with the South American Mercosur countries. That plan collapsed on Thursday evening. European unity and decisiveness are thus put to the test.
While Brazilian President Luiz Inácio Lula da Silva threatened on Wednesday with a ‘now or never’ deal, he backed down on Thursday after a telephone conversation with Italian Prime Minister Giorgia Meloni. He urged him to “need extra time, but not to be against Mercosur,” said Lula. According to the Brazilian president, she felt a certain political discomfort, but she was confident she could convince the Italian farmers.
By putting on the brakes, Rome supported Paris, after earlier this week it supported Belgium in its resistance to the Russian assets dilemma. Without Italy, the large majority needed for approval of the free trade agreement was lacking. France had been pushing for a postponement and better guarantees for a long time, in the “endless Mercosur saga”, wrote Le Figaro. According to Italy and France, the treaty does not sufficiently address the concerns of farmers.
Also read
The EU itself will lend 90 billion to Ukraine, route via Russian assets fails
Because the free trade agreement mainly encounters resistance from the agricultural sector, although the agreements between the European Union and the trade bloc Brazil, Argentina, Paraguay and Uruguay cover a large part of the industry. This involves, for example, the abolition of import duties and trade barriers, including better access for European companies to the South American market.
Tractors
Farmers fear unfair competition and lower environmental standards, and reinforced their concerns in Brussels on Thursday with a grim protest. Roads were blocked by tractors. Windows of the European Parliament were smashed. Fireworks were set off and the activists – 7,300 demonstrators according to the Belgian police – threw paving stones, potatoes and sugar beets. Opposition to Mercosur was paramount, fueled by dissatisfaction about upcoming cuts to the European agricultural budget.
French President Emmanuel Macron said Thursday morning at the start of the European summit: “We cannot accept that our agriculture, our food and the food security of our citizens are being put at risk with agreements that have not yet been finalized.”
Signing later will “change nothing,” Gerben-Jan Gerbrandy, MEP for D66, responds by telephone from Paris. “Government leaders must stop thinking in terms of months. Nowadays developments happen per week. And in a month’s time the farmers will still be against it.”
Gerbrandy points out that Europe needs “new friends”. “With the arrival of Trump, that urgency has become even greater.” According to him, the slowness with which Europe acts characterizes the ‘slow agony’ which, according to former ECB CEO Mario Draghi, could lead to economic stagnation in the EU, in light of the geopolitical competition with China and the US.
Also read
Thanks to Trump’s whims, the European Commission thinks it will finally work: a trade deal with South America
Acerbic
The postponement decision is bitter for Spain and Germany, which want to increase their car and machine exports. Politically, Chancellor Friedrich Merz in particular suffers a loss. He had firmly pushed for approval of the trade agreement at the European summit.
The Netherlands was also on board. The Hague, through outgoing Prime Minister Dick Schoof, stated at the start of the European summit on Thursday that the conclusion of the trade deal is “important”. On Tuesday, the House of Representatives narrowly approved the trade agreements, after previously voting against.
The farmers’ protest quickly took on a grim character on Thursday
Photo AFP, ANP/EPA
Jessika van Leeuwen, BBB MEP and member of the European Parliament’s International Trade Committee, said through her spokesperson: “We need global trading partners, especially in these turbulent times for world trade. But that does not mean that our farmers should be used as currency for other sectors.”
Resistance to the deal often comes from the (radical) right flank and the outspoken left side. The Conservatives and the Greens meet, although some of their concerns differ: from different environmental standards, such as pesticide and antibiotic use and deforestation, to an uneven playing field.
It now seems that postponement will not lead to adjustment. The Council and the European Parliament reached an agreement on Wednesday additional measures to respond to the concerns of the European agricultural sector. A formal agreement on the additional guarantees will probably follow in January, which opens the door to signing the trade agreement. The EU-oriented news site Euractiv message Friday afternoon that a time for signing has already been scheduled: January 12, in Paraguay.
Limited effects
According to Siemen van Berkum, researcher at Wageningen Economic Research, the farmers’ concerns are only partially justified. He led a study in which the effects of the Mercosur Treaty on the Dutch economy were calculated after fifteen years. “For the Netherlands, GDP in 2040 will be 0.02 percent higher in the event of an agreement, for the EU this will be 0.01 percent.” Van Berkum states that the service and industrial sectors in particular benefit from more exports. He acknowledges that more beef and poultry meat will be imported, and that the meat processing industry will become more competitive.
But, he concludes: “There are relatively few specialized beef farmers in the Netherlands, most cattle offered for slaughter come from dairy farms. Our study shows that price and income effects will be limited for all agricultural companies.”
The farmers in Brussels have been heard. But with increasing South American fatigue over the deal, which has been on the table since 1999, the EU no longer has time to lose from a strategic geopolitical point of view. Von der Leyen knows that. She aims to sign the treaty with Brazil, Argentina, Paraguay and Uruguay in early January. This will create a common market of 722 million inhabitants.
Also read
The Netherlands is the European gateway for goods from Mercosur countries
The journalistic principles of NRC