South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
Brussels has been struggling to secure a trade accord with Mercosur since 1999 and wants to make a fresh start with an exchange of offers on market access by the middle of May.
France, however, is leading a rebellion of 13 countries, which complain that Brussels is rushing to make offers on quotas and other tariff concessions without calculating the effect exports from South America’s agricultural powerhouses would have on EU farmers.
Ireland and Poland are two of France’s most vocal allies in calling for a delay.
Mercosur, which brings together Argentina, Brazil, Paraguay, Uruguay and Venezuela, is among the EU’s top 10 trading partners, ahead of countries such as South Korea and India. The two blocs traded goods and services worth €93bn last year, with the bulk of commerce between Europe and Brazil. Mercosur is a leading producer of beef and ethanol.
“Tactically, it is not in the EU’s interest to make at this stage proposals corresponding to the main offensive interests of our partners,” several EU countries, including France, wrote in a strategic note on the impending offer.
Paris has become an increasingly outspoken critic of the EU’s trade agenda — particularly citing the threat to farmers, and totemic exports such as champagne. François Hollande, the French president, this week issued a stark warning over the EU’s landmark trade negotiations with the US, insisting that: “At this stage, France says ‘no’”.
Spain, which enjoys close ties in Latin America, is one of the leading supporters of the deal and has followed the growing opposition with concern. “Spain considers that it would be a great error for France to try to prevent the exchange of offers,” said Jaime García-Legaz, the secretary of state for trade.
Last week, José Manuel García-Margallo, Spain’s foreign minister, said: “The Spanish position does not coincide with the French. We consider that opening negotiations with Mercosur is extraordinarily urgent and that, once the talks are started, it will be possible to resolve the issues that France has raised.”
Federica Mogherini, the EU’s foreign policy chief, is also a leading proponent of deeper trade ties with Mercosur, which she underlined with an official visit to Argentina in March.
The commission says it has taken note of the objections from agriculture ministers but still expects the exchange of offers to go ahead next week. Its officials stress that agriculture is only one aspect of the Mercosur relationship, with the EU being a major exporter of machinery and pharmaceuticals.
European companies currently pay about €4bn a year in tariff duties on their exports to Mercosur. The EU runs an industrial surplus with Mercosur, exporting €47bn of goods and importing €23bn.
But the agricultural divide is vast. Mercosur exports €21bn worth of farm products to the EU, and imports only €2bn.
Countries opposing the exchange of offers argue that the EU has not conducted a full impact assessment to evaluate the cumulative effect of upcoming trade deals with other big agricultural powerhouses such as the US, Canada, Australia and New Zealand.
They also argue that there is a danger of increased environmental damage — with EU farms at risk of being replaced by large Latin American ranches that can increase productivity by clearing forests.
In a statement last month, Cecilia Malmström, EU trade commissioner, suggested that the exchange of offers was now a formality. “I am glad we can now move forward with these longstanding negotiations,” she said. “Both sides are strongly committed, so I trust that the upcoming exchange of offers will allow us to successfully resume these talks towards an ambitious and comprehensive deal.”
Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.