Brussels wins the battle in France and ratifies the Mercosur agreement

BrusselsTwenty-five years of negotiations seem insufficient to conclude a trade pact. After the European Union finalized the agreement with Mercosur (Argentina, Brazil, Uruguay, Paraguay, and Bolivia) in December of last year, the European bloc is close to ratifying it. This process could also be complicated, especially given the opposition of France and Poland. However, both Paris and Warsaw have acknowledged that they currently lack the strength to block the agreement and have opened up to negotiating trade-offs with the European Commission.

Be that as it may, the path to final approval is not expected to be easy. The first step in the process is already starting later than expected. The European Commission had planned to present the validation of the agreed legal text at the beginning of the summer, but decided to postpone it pending the conclusion of a trade agreement with the Donald Trump administration. In fact, Brussels barely fired the starting gun for the ratification process this Wednesday, and now they must give the green light to the member states and the European Parliament, the institutions that have put up the most obstacles so far.

However, Ursula von der Leyen's European Commission is confident that it will be able to convince the state governments and a majority of MEPs, and has agreed to make minor modifications to change their minds. Furthermore, member states can approve it by qualified majority, and not all state governments need to be in favor. The only country that was openly against it was France, and since the far right regained the presidency in Poland, Poland has also been against it. Two states out of 27 that, on their own, do not have enough strength to overturn the trade agreement.

In fact, both Paris and Warsaw, seeing that they do not have enough strength to block the pact, have already publicly stated their willingness to negotiate some modifications to the legal text. "We have agreed that, since France does not want to join the blocking minority, we should at least prepare some defense mechanisms," Polish Prime Minister Donald Tusk admitted at a press conference. In turn, French government spokesperson Sophie Primas announced that they have already received Brussels' proposal to modify part of the legal text of the agreement, and the French executive is now analyzing safeguards to protect some key products from the European Union's agri-food sector.

European Trade Commissioner Maros Sefcovic has confirmed that Brussels has offered compensation to the countries that have expressed the greatest opposition and has expressed confidence that it will achieve definitive ratification of the agreement before the end of the year. In any case, the EU leader has warned that these modifications will not mean reopening negotiations. "We will not reopen the text of the agreement; it is a unilateral instrument that allows for the activation of a safeguard mechanism if necessary," he clarified at a press conference.

A "historic" agreement

European Union leaders repeatedly claim that this is a "historic" trade agreement. Just as Von der Leyen claimed when she signed the agreement with Mercosur, Sefcovic asserted that this is the largest free trade agreement the bloc has ever signed: it will create a joint market of more than 780 million people and is estimated to save Europeans around €4 billion in tariffs each year. Furthermore, Brussels estimates that it will increase EU exports to Mercosur by 39% over the next few years, another €49 billion, and will contribute to employing around 440,000 people throughout the European club. Brussels has also renewed its trade agreement with Mexico.

Specifically, the agreement with Mercosur aims to eliminate or substantially reduce tariffs on cars (around 35%), machinery (between 14% and 20%), and pharmaceuticals (more than 14%), three sectors that Mercosur is subject to. It also aims to eliminate customs duties on products such as wine (above 35%), chocolate (20%), and olive oil (10%).

Some agri-food stakeholders, member states, and political parties (particularly those on the far right and left in Europe) have historically opposed this trade pact, believing it could be detrimental to the European primary sector and local production. However, the European Commission maintains that free trade in general, and specifically with the Mercosur countries, is positive for the EU. "We are the most competitive in the world. No one is more competitive than us," Sefcovic argued.