Mercosur: What does it all mean?


With all the recent talk of the Mercosur trade deal, offers and increased offers, we offer an explanation for those out of the loop. Learn all about the deal below!

Mercosur: What does it all mean?

  • ADDED
  • 8 mths ago

With all the recent talk of the Mercosur trade deal, offers and increased offers, we offer an explanation for those out of the loop. Learn all about the deal below!

Mercosur negotiations remain ongoing, though they have been met with further stiffened opposition, as the EU banned 20 Brazilian meat plants for failing to meet standards.

The EU has announced that they will ban another 20 Brazilian meat plants for failing to meet EU standard. This has led to many calls from organisations, such as the IFA and ICMSA, for any proposed increase in meat Imports from the region to be scrapped. Recently it has been reported that the EU had increased their offer of allowing 45,000tonnes of meat imports from the region into the EU, up to 75,000 tonnes, a move slammed by many organisations.

Essentially the main worry is about the high offer of tariff-free meat exports from the region to the EU.

It is feared that this offer, if true, will create extra competition for farmers and affect prices within the country, continent, and in turn encourage many to step away from it as a full-time profession if not altogether. Others also worry about Brazil's recent food standard problems, and think that the region will not be held to the same high standards as EU farmers are.

Where it all began:
The Mercosur region was first established in 1991 and includes Argentina, Paraguay, Uruguay, Brazil and now Venezuela.

The much-discussed trade deal between the EU and Mercosur has been in the works for a number of years now, with negotiations having been relaunched back in 2010. Ten rounds of discussions took place in total with negotiations then paused in 2012.

Discussions were then reopened in May 2016, with offer exchanged for the first time since the relaunch. The next round of discussions is due in Brasilia between October 2nd and 6th 2017.

What the deal will cover:
The free trade agreement in discussion will be part of an overall negotiation for bi-regional Association Agreement, while the deal covers a range of topics such as:

• Rules of origin
• Technical barriers to trade
• Sanitary and phytosanitary measures
• Services
• Government procurement
• Intellectual Property
• Sustainable Development
• Small and Medium-sized Enterprises.

Who is negotiating and why? Why is it important?
There are four main countries in the Mercosur region involved in the recent negotiations with the EU.

These include Paraguay, Brazil, Argentina and Uruguay, with Venezuela the latest to join. The EU accounts for Mercosur’s first trading partner and makes up 21% of the bloc’s total trade for the whole of 2015. The deal would allow for the free-trade of goods and services from Mercosur regions to the EU and vice versa.

They are negotiating to try and implement changes to the current trade agreement and with the recent Brazilian Meat scandals, standards are the focal point of any trade agreement. It is also felt that the EU’s trade to these regions will be more important, with Brexit impending.

The EU’s exports to the Mercosur region increased by over 100% in ten years, from 2005 to 2015. Exports were worth over €46 billion to the EU in 2015, while Mercosur exports to the EU have also increased in the same ten-year period, from €21 billion to €46 billion, meaning a deal does have value in one sense.

Mercosur Exports:
The Mercosur regions export a number of products used extensively by consumers in the EU.

In 2015 their biggest exports to the EU were mainly agricultural produce. This included products such as foods and beverages, tobacco, vegetable products, fruits, coffee, meats and other animal products. They also exported mineral products such as wood and paper products and machinery.

The EU also is one of the main exporters of commercial services to the Mercosur region, this accounted for over €20 billion in 2014. The EU also exports machinery, vehicles, machinery parts, chemicals and pharmaceuticals to the regions.

The EU is currently the biggest foreign investor in the region, with an estimated €387 billion of stocks in 2014. Mercosur also holds a high number of stocks within the EU, totalling €115 billion in 2014.

The new proposals suggest that the EU will allow for up to 75,000 tonnes of meats, tariff-free, to be exported from Mercosur for sale in the EU.

Further reports suggest that this offer had been increased to 99,000 tonnes, again tariff-free, a report strongly denied by Commissioner Phil Hogan. The EU has said that any exporters must adhere to stricter standards, such as those within the EU, and have backed said move with the banning of 20 further meat plants in Brazil for failing to comply.

They say that they hope that these negotiations will lead to the better screening of produce prior to exportation by these Mercosur regions. At the moment, it seems like the deal is still on, with talks ongoing, though nothing has been decided yet.



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