Could Trump’s new global tariff scupper the US-EU trade deal?
Listen | 37:48
Business
Ursula von der Leyen has a big political call to make on Mercosur deal
DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.
European Commission president Ursula von der Leyen has a big political call to make soon on the Mercosur trade agreement. In the coming days it will be in the gift of the commission to bring the deal into force provisionally. Cue outrage from the farming lobby.
Von der Leyen, who heads the European Union’s powerful executive arm that leads on trade negotiations, has in both private discussions and public comments signalled a willingness to do so.
The free trade pact agreed between the European Union (EU) and the Mercosur countries of Brazil, Argentina, Uruguay and Paraguay, is hated by beef farmers, who fear increased competition will push down prices.
Deciding to crack ahead before the deal has been ratified by MEPs in the European Parliament would be controversial. The farming lobby, environmentalists and politicians on the far-right and the left will cry betrayal by Brussels bureaucrats.
A sufficiently large majority of national governments – 21 out of 27 member states – backed the deal in an EU vote, meaning it was approved, despite the opposition of France, Poland, Ireland, Hungary, Austria, and Belgium’s abstention.
There was a line in the fine print of that decision that was not really remarked upon at the time.
The commission would have the power to provisionally apply the deal, provided it had been ratified by the parliament of at least one Mercosur country, before it passed the European Parliament.
European countries who support the deal are keen on the large South American market it will open up for exporters and businesses.
Everybody expected the European Parliament vote on the agreement to be a close run thing.
However, rather than decide on whether to ratify or reject the Mercosur pact, MEPs opted to kick it to the European Court of Justice for a legal review, which few expect will strike it down. It could take up to two years to get a ruling.
That move to see what the EU court says, in effect delaying the parliament vote, now looks like a serious misstep by opponents of the deal.
Independent Ireland MEP Ciaran Mullooly, one of the loudest critics of the Mercosur deal, welcomed the referral to the courts as a “clear victory for farmers”.
Rather than freeze the clock on the deal, the court review has instead given the European Commission political cover to bring the agreement into force in the meantime.
Von der Leyen has said branching out to new trading partners has become a geopolitical necessity for Europe, in this volatile world of US tariffs and aggressive industrial competition from China.
Argentina is expected to ratify the deal on their end this week. The others in the Mercosur bloc are not far behind.
Trade commissioner Maroš Šefčovič has indicated Brussels may wait until a few of the Mercosur countries have it ratified, before taking a decision.
The EU’s free trade deal with Canada has been applied provisionally since 2017.
Fears about the harm the Ceta (Comprehensive Economic and Trade Agreement) deal would wreak upon Irish agriculture were not borne out and the political heat has gone out of that fight. The same thing may well happen with the Mercosur deal.
Continue Reading