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Brussels has drawn up political “safeguards” to appease France’s farming lobby and win Paris’s backing for a trade deal with the Mercosur bloc of South American economies.
The EU is targeting final approval for December of the Mercosur deal, which would create a shared market of 700mn consumers by combining the EU with Brazil, Argentina, Uruguay and Paraguay.
Two decades in the making, the agreement won preliminary assent last December as part of a renewed push in Brussels to diversify its trade partnerships, fuelled by the election of US President Donald Trump and his protectionist worldview.
However, France has said it would oppose the deal, which still needs final approval from the EU’s 27 member states, if it did not include safeguards to ease the concerns of its politically powerful agricultural sector. It threatened to lead a blocking coalition that would oppose a final signature.
That demand for safeguards will be answered in a formal proposal set to be shared with EU capitals, four officials familiar with the negotiations told the Financial Times. This would include a “political protocol” that spells out “circuit breakers” to protect EU producers should imports of some products breach certain limits.
The safeguards would apply to the volume and prices of beef, chicken and sugar, two of the people said, in a sop to Paris that could be used to placate French farmers, who are concerned about unfair competition.
The deal can be blocked by a coalition of four or more EU states representing at least 35 per cent of the EU’s population, which gives oversized importance to the position of France, the EU’s second-largest member.
“There are many member states which are not happy with the agricultural part of the Mercosur agreement. That’s why they need a safeguard clause that is credible,” said one of the people.
Two officials in Mercosur countries told the FT that they were aware of discussions on new agricultural proposals from Brussels related to the agreement but had no details.
The concession to secure France’s support for the deal would enable the commission, which runs trade policy on behalf of the EU’s member states, to formally agree the deal at a summit to mark the end of the Brazilian presidency of Mercosur in December, the officials told the FT.
However, any additional limits on farm exports from Mercosur countries are likely to face strong resistance from South American nations. “We have not seen a proposal but new safeguards would affect the balance of the agreement,” said one senior diplomat from a Mercosur nation. “They can label it however they want but, if it affects trade flows, we would consider it a reopening of the talks.”
Brazil’s President Luiz Inácio Lula da Silva has long championed the Mercosur trade deal with the EU, and tried to convince President Emmanuel Macron during a visit to France last month to drop his country’s opposition.
The commission declined to comment.
France, which has been backed in its criticism of the deal by Poland, Austria and other countries that fear for their agricultural sectors, has claimed it would cause environmental damage and subject EU farmers to unfair competition.
Additional reporting by Andy Bounds in Brussels
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