A trade deal has recently been agreed upon between the EU and Mercosur, News Editor Beth Clifford examines what this means for Ireland and its economy.
On 17 January, much to the dismay of many European farmers, a free trade agreement was signed by the European Union and Mercosur, a South American trade bloc, in Paraguay’s capital city of Ascunción, following over 25 years of negotiations, amidst the context of rising global economic tensions and punitive US tariffs.
The free trade deal between Europe and Brazil, Argentina, Paraguay, and Uruguay will eliminate approximately 90% of tariffs on goods and services in the industrial and agricultural sectors, while some tariffs will be gradually cut over the course of 10-15 years. Key farm products coming from South America, such as beef, will be subject to strict quotas and must adhere to EU standards of food safety and quality.
The free trade deal between Europe and Brazil, Argentina, Paraguay, and Uruguay will eliminate approximately 90% of tariffs on goods and services in the industrial and agricultural sectors.
Ireland and France lobbied to ensure that a protective measure would be included in the new deal that allows for the EU to reintroduce higher tariffs on Mercosur goods if there is evidence of a 5% price decrease on sensitive European products.
While safeguards are set in place to try protect European markets from increased South American competition, Irish farmers nonetheless have voiced their concerns over this deal, fearing that agricultural products from across the Atlantic will undercut their livelihoods and business. This concern was displayed in a recent protest in Athlone, Westmeath on 10 January, which saw farmers across Ireland gather together to emphasise their disapproval. Several Irish MEP’s too have chimed in on criticising the agreement.
Sinn Féin MEP Lynn Boylan points toward the negative environmental impacts that could accompany this deal, stating that it incentivises greater deforestation of the Amazon Rainforest and threatens indigenous groups within the region. Independent MEP Luke Flanagan argues that the safeguard clause contains vague language, and would take months in reality to be implemented which could prolong harmful effects to farmers’ incomes.
Irish farmers nonetheless have voiced their concerns over this deal, fearing that agricultural products from across the Atlantic will undercut their livelihoods and business
On 21 January, EU parliamentarians voted to challenge the Mercosur trade deal by referring it to the Court of Justice of the European Union (CJEU) to investigate if it falls in line with EU law, which could delay formal ratification by two years. A total of 334 EU lawmakers voted in favour of the referral, with 324 against and 11 abstentions, signalling a clear and contentious divide inside the European Parliament. Nine of the 14 Irish MEP’s voted to pass the motion, with one being absent.
If referred to the CJEU for legal advice, the EU still has the ability to provisionally pass and enact the trade agreement. Doing so however could risk political upheaval and further backlash from both European politicians and farmers. At a time of significant political uncertainty and instability, the Mercosur trade deal may create more economic and political rifts among member states than it does unite them.