One step away from signing after 25 years of negotiations? The free trade agreement between the European Union and the Mercosur countries (South American Common Market) is on the table of the G20 in Rio de Janeiro. But the Free Trade Agreement with Mercosur does not please French farmers, who have been on the streets again since yesterday. And the Italian government also raises some doubts. The path seems to be that of compromise.
The negotiation has been ongoing for 25 years and concerns 717 million consumers. Negotiations began in 1999 and only in 2019 was there the first version of the agreement which, however, left many countries dissatisfied. The ratification of the treaty never occurred and now the crucial date is set for the Montevideo summit, December 5-6, but the Brazilian summit in recent days could already anticipate decisive steps. It is one of the most ambitious free trade agreements in the world which aims to progressively reduce 90% of customs tariffs on agri-food and industrial goods between the two economic blocs.
The European Union and the founding countries of Mercosur (Brazil, Argentina, Paraguay, Uruguay) aim to strengthen their respective markets through greater commercial openness. For Europe, the elimination of duties on cars, machinery, medicines and clothing represents an opportunity to revive sectors in difficulty, like the German automotive one. At the same time, the South American bloc aims to increase exports of agricultural products such as beef, sugar and poultry, thanks to the reduction of European customs tariffs. An important element is the protection of European geographical indications, with over 350 products protected on the South American market. But discussions remain heated over environmental and regulatory issues, with the Union demanding stricter production standards to ensure reciprocity and sustainability, requests that the Mercosur countries consider difficult to apply.
While some EU member states, including Germany and Spain, support the deal, France remains the main obstacle. French farmers and breeders, supported by 600 parliamentarians who recently sent a letter to Ursula von der Leyen, fear that the opening of the European market could seriously damage the agricultural sector. The less rigorous standards in South America, especially regarding biosafety and pesticide use, represent a competitive advantage for South American producers that is also of concern to Italy. French farmers and breeders have been ready to protest for months.
The Italian Minister of Agriculture, Francesco Lollobrigida, expressed similar reservations, underlining how the European single market risks being invaded by low-cost products, which are difficult for Italian and European companies to compete with. “To date, although we are in favor of open and regulated markets, Europe is not able to guarantee the protection of its entrepreneurs with commercial agreements with nations that have extremely lower production costs and are therefore capable of entering the market with unsustainable prices for our entrepreneurs,” said Minister Lollobrigida. “We are in favor of the EU-Mercosur agreement in principle, but there are some points that need to be resolved because they are not fully satisfactory for Italy,” specified Foreign Minister Antonio Tajani. Italian trade associations, such as Coldiretti, also criticize the potential impact of the agreement on crucial Made in Italy sectors, such as dairy and wine production.
To overcome the French veto, the European Commission is evaluating various strategies: offer subsidies to European farmers harmed by the agreement (an option rejected by the Parisian unions) or divide the treaty into two parts. The second option, which would separate the commercial component from the general cooperation aspects, would allow approval by a qualified majority, reducing the weight of the French veto. To block the ratification of the European Union, Paris would have to find an alliance with at least four other member states.
The Free Trade Agreement with Mercosur represents a unique opportunity for the EU to expand its economic influence in South America, also guaranteeing access to strategic resources such as lithium. But the obstacles in the way still make the agreement very uncertain. The challenge is to balance economic opportunities with the protection of vulnerable sectors and sustainability.
