World trade: Message to Trump: EU starts coordination via Mercosur-Deal

In the EU, the final voting process begins with the South American state alliance Mercosur. The EU Commission initiated the contract texts for the agreements with the states of Brazil, Argentina, Uruguay and Paraguay to the governments of the EU countries and the European Parliament. The Brussels authority hopes that this will agree until the end of the year at the latest and thus enable the agreement to be concluded.

According to the EU Commission, the new free trade zone with more than 700 million inhabitants would be the world’s largest of this kind and is also intended to set an example against the protectionist customs policy of US President Donald Trump. It is planned to largely reduce tariffs and trade barriers between the EU and the Mercosur countries.

The EU Commission estimates that the agreement can increase annual EU exports to South America by up to 39 percent (49 billion euros)-and thus support more than 440,000 jobs across Europe. There are particularly great opportunities for the auto industry, mechanical engineering and the pharmaceutical industry. For example, an inch of 35 percent is currently due on car imports in the Mercosur countries.

No veto law for customs rules

The agreement was created in such a way that the trading part with the new customs regulations can be decided by majority decision and cannot be prevented by national parliaments. The Commission wants to prevent the planned free trade zone from failing due to the resistance of individual Member States. Individual Member States would only have a veto law with the planned agreements on the political dialogue and cooperation. The same procedure is also planned for an intended addition to the existing trade agreement with Mexico. The voting procedure has now also started for them.

EU Commission President Ursula von der Leyen spoke of important milestones for the economic future of the EU. “We continue to diversify our trade, promote new partnerships and create new business opportunities,” she said. EU companies and the European agricultural and food sector would benefit directly from lower tariffs and lower costs, which contributes to economic growth and employment. The EU foreign commissioner Kaja Kallas emphasized that the agreement was also a key to more global influence in Europe.

The EU Commission had concluded negotiations on the Mercosur Agreement last December despite continuing criticism from countries like France. Most recently, the EU’s customs dispute brought new dynamics into the process again with the United States. Many countries now want to show that the times of fair trade are not over – Germany is particularly part of them.

Worry about price war in agriculture

However, critics of the plans fear that European farmers could be forced into a merciless price war and the rainforest destruction in South America will be fired. The EU Commission and the Federal Government see this as a panic manner. The Brussels authority, for example, emphasizes that due to quantity limits, only a part of the agricultural imports from the Mercosur countries will benefit from the agreement. For beef, for example, the limit is 1.5 percent of EU production, with poultry at 1.3 percent.

In addition, the EU Commission proposes the Member States to set up a security network against unexpected market disorders. Among other things, it should consist of a 6.3 billion euro pot for crisis measures.

Representatives of the German economy appealed to the political decision -makers to conclude the agreement quickly. “This is Europe’s historical and at the same time the last chance to appear in the South American market as an equal partner,” commented the President of the Federal Association of Wholesale, Foreign Trade, Services (BGA), Dirk Jandura. Anyone who is now hesitant, sacrificing jobs and prosperity in Europe in favor of political particular interests.