Mercosur on hold - again

Throughout Europe there have been marches, protests, and arguments against the Mercosur trade agreement, with the powers that be in Brussels arguing that, after 25 years spent in negotiations, it must be voted through. This came to a crescendo as MEPs prepared to cast their votes for or against. At time of writing this was thrown into chaos as the European Parliament voted (334 for and 324 against) to refer the trade agreement to the Court of Justice of the European Union (CJEU) to determine whether it is compatible with EU treaties. Typically this court takes two years to deliver its findings; but watch this space, as this could be the quickest opinion ever delivered. 

But what are the underlying reasons as to why Brussels considers it vital to have an agreement with the Mercosur countries. In an ever-changing world, the need to find new markets for European products, without facing prohibitive tariffs, is a number-one priority. One of the founding pillars of the European Union was to enhance its agricultural base through the Common Agricultural Policy (CAP). In 1969 during its peak, CAP accounted for approximately 80 per cent of the EU budget. It became clear that this was not sustainable and by 2021, CAP payments fell to less than 25 per cent of the EU budget. There is no doubt they will continue to reduce. 

Food security and carbon footprint 

It appears that food security is no longer a strategic priority for the EU. It also appears that Brussels will pursue a policy of importing cheaper agricultural produce rather than subsidising home grown.  In doing so the heavy

burden of the CAP will be further reduced. It is easy to accuse Brussels of hypocrisy as they ignore their much-trumpeted stand on climate change and reducing our carbon footprint. Can they justify the high standards they have forced on European farmers, while turning a blind eye to the catastrophic destruction of forests in the Mercosur countries? And what about the cost and environmental damage of transportation of exports from these countries into Europe?

Unprecedented times

The culmination of the Mercosur trade agreement comes at an unprecedented time in world history. With the Trump administration’s recent strategic review declaring that, long term, the US does not see Europe as a close ally, together with its unpredictable methods of trading and the imposition of erratic tariffs, Brussels is looking at other trading partners, regardless of how unstable the new partnership may be. 

The population of the Mercosur countries is around 260 million; certainly, a sizeable market. Reports suggest that the Mercosur trade agreement will create 400,000 new jobs across the European Union through increased exports, as the trade agreement will eliminate tariffs on around 91 per cent of goods traded between the EU and Mercosur countries.

What are the benefits of all this for Ireland? It is argued that Ireland can build on its €1.8bn trade with the Mercosur countries, but it won’t be to the same extent as other EU Countries with a considerable manufacturing base. In the end we can huff and puff and protest all we like but we are outnumbered by the vested interests of our European partners who have a much wider manufacturing/industrial base and a different agenda and who stand to benefit massively from the Mercosur trade agreement.