The EU is to restart free-trade talks with the Mercosur group. If these are successful there could be big impacts on some EU commodity markets – especially meat.
Mercosur (Mercado Común del Sur in Spanish, or Southern Common Market) comprises four South American countries: Brazil, Argentina, Uruguay and Paraguay. Venezuela is negotiating to become the fifth full member; other South American states are associate members. The agricultural industry within this trade block is large and competitive.
Free-trade talks between the EU and Mecosur began in 1999, but have been on hold since October 2004 as the two sides failed to bridge their differences. With the Doha World Trade Organization round going nowhere fast, attention has turned to these types of 'bilateral' agreements as a way of increasing trade and boosting economic recovery.
Now, the Trade Directorate within the EU Commission has revived talks between these two bodies. It believes that gains from the industrial and services sectors more than outweigh potential losses in agriculture. However, the farm commissioner, Dacian Ciolos, has registered his opposition, along with farm ministers from 14 EU member states. Internal EU Commission analysis puts the potential reduction in turnover for EU farming anywhere from €3bn to €13.5bn per year – depending on the precise terms of an agreement. The sectors likely to be hit hardest are beef, poultry and pigmeat. The French farm minister has stated that a deal could see beef imports rise by 70%, and poultry by 25%.
Producers should note this is only the restarting of talks. Last time around these took five years and still failed to achieve an agreement. Even if a draft agreement is reached it has to be ratified by EU trade ministers, and also, crucially, the European Parliament (following the Lisbon Treaty).
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