John Whelan: Fence-sitters like Ireland need to come to terms with benefits of Mercosur
European Commission president Ursula von der Leyen. The clock is ticking down to a tentative December 20 date for Ms Von der Leyen to fly to Brazil for a formal signing ceremony of Mercosur.
Picture: AP Photo/Pascal Bastien
Last month’s fresh pushback in the European Parliament despite the ‘safeguards’ designed to shield European farmers from a potential surge in imports from agricultural heavyweights Brazil and Argentina, has jeopardised the planned December signing of the mammoth EU-Mercosur trade agreement.
The pushback came amongst chaotic scenes in the EU Parliament from key national delegations, including Ireland, Poland, France, Bulgaria, Romania, and others, who rejected attempts to fast-track a vote to approve the ‘safeguards ‘.
With the clock ticking down to a tentative December 20 date for European Commission president Ursula von der Leyen to fly to Brazil for a formal signing ceremony, the path to that successful outcome is narrowing.
Meanwhile, the Trump administration is rushing to finalise new trade agreements with Latin American countries, increasing pressure on the European Union as it attempts to finalize its own Mercosur deal.
In recent weeks, the White House has announced potentially historic framework agreements with Argentina, Guatemala, El Salvador, and Ecuador, as part of the Trump administration's push to shift trade balances and curb the EU and China’s growing influence in the region.
Mr Trump announced South American trade deals will allow greater and more streamlined market access to the US markets, with lower tariffs than those imposed on EU countries.
Argentina's libertarian leader Javier Milei, who received financial bailout from the Trump administration, faces a tricky situation, as Mercosur rules require all member countries to agree on external trade deals. Argentina might have to choose between this US agreement or staying within Mercosur.
A finalised US-Argentina deal could damage relationships with the rest of the regional partners who make up the Mercosur group and could completely derail the EU deal. This would be a major blow to Brazil, the lead country of the group, and would play well into the hands of US president Donald Trump who has criticised Brazil's president Luiz Inacio Lula da Silva and slapped tariffs of 33% on Brazil’s exports to the US in recent months.
With Mr Trump breathing down Europe’s neck, fence-sitters like the Ireland need to come to terms with the fact that the deal would be a welcome boost for the EU’s struggling exporters.
For an economic region with 250m people – a population equivalent of approximately half the EU - there is potential for the Mercosur region to become a major trading partner for both Ireland and the EU.
It opens new markets for Irish exporters by reducing tariffs on industries like machinery currently at 14%–20% and pharmaceuticals with tariffs up to 14%. Additionally, tariffs on EU food and beverage exports, including wine, chocolate, and spirits, will be gradually phased out, while specific quotas will open up new opportunities for EU dairy exports like cheese and milk powder.
Across the EU, the agri-food exports to Mercosur are expected to increase by nearly 50%, creating a substantial new market for farming products as US and Chinese markets become more uncertain. And yes, with the agreement, the EU will remove tariffs on 92% of imports from Mercosur over the course of up to 10 years.
The Irish government has voiced its concerns and is opposed to the deal in its current form. The biggest hurdle that remains is approving a workaround to protect European farm markets in the event of a sudden influx of produce from the Mercosur region.
To enable a sign off, the agreement needs to be ratified by at least 15 member states, representing 65% of the EU population. On its own, Ireland’s negative stance alone cannot block the agreement, but they could add to the headaches by calling with other states for a legal opinion from the Court of Justice of the European Union on whether the overall deal is compatible with the European treaties.
That would paralyse the European Parliament’s approval of the safeguards until the court, not known for its rapid procedures, rules on the issue.
To close the deal in time, everything needs to go right. European MEPs must first approve the additional safeguards, after which the Council, the intergovernmental branch of the EU, then needs to sign off on the broader deal. Finally, the Commission must sign it.
Ursula von der Leyen already has her tickets to Brazil. The onus is the Irish Government to ensure that they are not the cause of her missing the flight.
