A trade deal between the EU and the Mercosur countries could be signed by the end of the year, the European Commission says.
Following the completion of negotiations, the European Commission has today officially put forward its proposals for a trade deal with four south American countries.
The deal will now be scrutinised by EU governments and the European Parliament.
“The deal with Argentina, Brazil, Paraguay and Uruguay (EU-Mercosur Partnership Agreement) will create the world’s biggest free trade zone, covering a market of over 700 million consumers”, the European Commission says.
It is expected to support 440,000 jobs in Europe and expand EU exports to south America by more than one-third.
The deal will see trade tariffs reduced on exports of cars, machinery and, importantly for Ireland, pharmaceuticals.
Irish pharma companies currently face a 14 percent tariff when exporting to Argentina, Brazil, Paraguay and Uruguay.
But there are deep concerns about the impact on farming as the deal will open up the European market to increased imports from Mercosur.
The Irish Farmers Association (IFA) previously called the proposed agreement a “sell-out”.
The Irish and French governments have expressed strong concerns about the Mercosur deal.
But the EU has the power to enact trade deals with the support of a ‘qualified majority’ of member states and most other EU members are likely to support the deal.
“The impact on certain countries, be it Ireland, be it France, we’re obviously taking those concerns very, very seriously”, a senior EU official said earlier.
Under the deal, 99,000 tonnes of beef, mainly from Brazil and Argentina, will be allowed onto the EU market with a reduced tariff of 7.5 percent, compared to a normal tariff of between 40 to 50 percent.
That only equates to two steaks or hamburgers per EU citizen per year, the senior official quipped.
The European Commission says it has a safeguard clause to ensure that if the deal is overly disruptive to Irish farmers, they can put the brakes on.
The EU has also proposed a new €6.3 billion ‘Unity Safety Net’ fund under the new Common Agricultural Policy (CAP) from 2027 to bolster European farmers against unfair competition.
The current CAP has an annual €450 million Agricultural Reserve for the same purpose, EU officials said.
The European Commission has also done a separate deal with Mexico which is also being put forward for approval.
European Commission President, Ursula von der Leyen, said:
“Our agreements with Mercosur and Mexico are important milestones for the EU’s economic future. We are continuing to diversify our trade, foster new partnerships and create new business opportunities.
EU businesses and the EU agri-food sector will immediately reap the benefits of lower tariffs and lower costs, contributing to economic growth and job creation. The EU is already the world’s biggest trading block, and these agreements will cement this position.”
EU agri-food producers are going to be “one of the main beneficiaries” of this deal, EU officials insisted.
It will allow Irish farmers to “conquer new markets” whilst at the same time the European Commission has been “extremely careful” to protect European Union products like beef.
Irish farmers fear that they will be undercut by south American exports.
“We cannot countenance a deal that refuses to recognise the gap in standards between the EU and Brazil,” Irish Farmers’ Association (IFA) President, Francie Gorman said.
The European Commission says EU food standards will apply to all imports and will be rigorously upheld.
The deal will now be considered by ministers in the Council of the European Union and by MEPs in the European Parliament.
The European Commission hopes to get the go-ahead to sign the deal by the end of the year.
The trade deal would then apply provisionally, but in full, until all 27 EU member states have ratified the final agreement.