After 20 years of trying, the European Union on Friday finally reeled in its biggest trade deal by striking an accord with the South American Mercosur bloc.
The political deal will give the European Commission something to brag about at the summit of G20 leading economies in Osaka, where the EUs free-trade agenda is finding itself increasingly isolated in the face of U.S. protectionism and Russian President Vladimir Putins assertions that liberalism has had its day.
Indeed, only moments after the deal was struck, European Commission President Jean-Claude Juncker said in a statement that it was a “historical moment” precisely because of the fevered global debate. “In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade,” he said.
Also suggesting that the world is fracturing along ideological lines on openness to trade, EU Trade Commissioner Cecilia Malmström added: “This agreement adds four more countries to our impressive roster of trade allies.”
The four Mercosur nations are Argentina, Brazil, Paraguay and Uruguay.
The deal is the EUs biggest in terms of tariff reduction, which will come as a catalyst to many traditional industries.
Any European celebrations in Japan may be short lived, however. The EU will still need to sell the deal to skeptical countries and parliamentarians, who could well lay down hurdles if the agreement — which centers on a trade-off between cars and cows — is seen as posing a threat to farmers and the environment.
While the Commission has an exclusive competence to negotiate EU trade deals, the agreement will still need approval from member countries and the European Parliament, not to mention potentially 40 or so national and regional assemblies.
The deal is the EUs biggest in terms of tariff reduction, which will come as a catalyst to many traditional industries. It will strip away some €4 billion of duties each year, over an area with a population of 780 million people.
Mercosur countries are commiting to withdraw high tariffs on cars (35 percent), machinery (up to 20 percent) and chemicals (up to 18 percent).
Farmers on the line
Europes challenge comes in the agricultural sector, however, as it will have to open its market to the highly competitive beef of the Argentine Pampas and sugar cane from Brazilian plantations. Europes main farm lobby, Copa-Cogeca, warned before the deal that the Mercosur “endgame” should not mean “game over” for the European farm model.
EU Agriculture Commissioner Phil Hogan accepted that the deal presented “some challenges” to European farmers, but countered that they should be able to export premium products more effectively thanks to an agreement on protections for iconic food names ranging from Italys Parma ham to Frances Comté cheese.
Europes food producers should also benefit from the dropping of tariffs on spirits (up to 35 percent), wines (27 percent) and confectionary (20 percent).
European ethanol producers saw no upside, however, and warned the deal threatened to “trade away” their business. Emmanuel Desplechin, secretary general of ePURE, the European renewable energy association, said his industry was being thrown “under the bus.”
Crucially, the deal does ensure that both parties should hold fast to the Paris Climate Agreement, although this has become a contentious topic in recent days.
Officials in Osaka told POLITICO that U.S. President Donald TrumpRead More – Source