What to expect from the provisional application of the EU–Mercosur agreement

But will farmers’ fears actually materialise?

It is now just a matter of weeks before the famous EU-Mercosur free trade agreement comes into effect, at least provisionally.

How did we get here?

In January, EU member states finally gave the green light to the deal.

France, opposed to the treaty due to protests from its farmers, was unable to block its signing.

In an extremely rare development, the EU then signed a major trade agreement without France’s approval.

French president Emmanuel Macron did, however, secure concessions from the European Commission, which incorporated safeguards into the text.

It might be related, or not, but Macron also won victories on other European issues, such as the role of nuclear power in energy policies or the ‘Made in Europe’ industrial concept. We discussed this recently, on the episode of 5 March.

The EU-Mercosur agreement had been sitting in the commission’s drawer for years, but everything sped up in recent months.

On 10 March, the European Commission even authorised the provisional implementation of the treaty after three Mercosur countries finalised their procedures.

Why the rush? Because external events put pressure on Europe.

The trade war declared by Donald Trump, unfair competition from China, and supply chain disruptions due to geopolitical tensions…

The European Commission could no longer afford to delay this agreement, which it has always called highly strategic.

A priority shared by all the EU’s liberal member states, which advocate for free trade deals.

The tragic news from the Middle East in recent weeks also allowed the Commission to push the trade deal forward, under the media radar.

How will this provisional implementation affect European consumers and farmers?

Agricultural products from the four Mercosur countries—Brazil, Argentina, Uruguay, and Paraguay—which are already highly competitive, will become even more present on supermarket shelves.

Why? Because they will be a bit cheaper than before, thanks to reduced tariffs.

But don’t expect a flood of Mercosur products on the European continent.

Because tariffs won’t disappear entirely.

Some imports will be duty-free, but reduced tariffs will still apply to most agricultural goods

Sensitive products like beef and chicken will be subject to quotas. Beyond a certain import volume, they will be taxed at full rates again.

For beef, this quota volume represents less than two percent of European consumption.

Moreover, meat imported from Brazil or Argentina is unlikely to compete much with meat sold in butcher shops or supermarkets.

Imports are more commonly used in processed products like frozen lasagna for example. So, the competition will likely play out more in the industrial food sector.

Finally, if there’s an excessive influx of products or a sudden price drop, the Commission has included safeguard clauses to suspend liberalization.

But there is still the concern about sanitary and phytosanitary standards.

What does the agreement say about this? In principle, European standards must be strictly respected. But in practice, they often aren’t, and there are few controls at borders or on-site to ensure compliance. This is why European farmers, who are held to high standards and closely monitored, oppose the deal.

The European Commission has promised to strengthen controls in the coming months.

Beyond the impact on European markets, what does the EU gain from this agreement?

European businesses should see a boost in exports to Mercosur countries.

This will primarily benefit high-tech industries and the automotive sector.

But even the agri sector should reap benefits, particularly winegrowers and producers of protected designation of origin.

The agreement will also allow the EU to diversify its supply sources for certain strategic products, gaining preferential access to raw materials it desperately needs.

Brazil, for example, has significant rare earth resources—crucial for producing electric vehicles, wind turbines, and smartphones.

In conclusion, the famous EU-Mercosur agreement is set to enter into force smoothly.

But the political saga isn’t over yet: the European Parliament still needs to ratify the deal for it to fully take effect. And that could take time.

The example of CETA, the agreement with Canada signed in 2017, shows that provisional application can be extended indefinitely: CETA has been provisionally applied for nearly 10 years.