The French at least are making their opposition to the proposed EU-Mercosur trade deal abundantly clear, and for once French President and World Economic Forum lackey Emmanuel Macron is listening.
French farmers protests are always laced with interesting strategies; here french farmers are covering Govt offices with manure ! pic.twitter.com/3FR8mFOmSr
— Ramandeep Singh Mann (@ramanmann1974) November 21, 2024
Macron is no stranger to being slapped and hit with eggs by the French, and potentially fearing what the manure protest tactic augurs for his future he continues to voice strong opposition to the EU-Mercosur trade deal.
The problem is that Paris doesn’t look to have enough bloc support to derail the deal, which is sailing towards approval next week.Let’s take a look at the proposed deal, what it means for the average European, and why the EU is so eager to get it finished.
What Is the EU-Mercosur Trade Deal?
Chief negotiators from the EU and the Brazilian-led South American bloc of Mercosur countries are meeting in Brasília this week for final talks on their trade agreement that’s been under discussion for a quarter century. The big push from Brussels to get a deal done now is purportedly to help counter China’s influence in South America. Mercosur also includes Argentina, Paraguay, Uruguay and Bolivia as members.
The talks seek to establish one of the world’s biggest free trade zones that would cover about 750 million people and about one-fifth of the global economy. Here’s Euronews with more:
The FTA aims to remove tariffs on 100% of all industrial goods imported by the EU from the South American bloc. Meanwhile, Mercosur would remove tariffs on 90% of industrial goods imported from the EU, including cars, machinery, IT equipment, textiles, chocolate, spirits and wine.
“The tariffs on cars and car parts to Mercosur are currently 35%, which is very high. Machinery around 14%-20%, chemicals around 18%,” said Li. “So that’s why then countries like Germany will be very happy to see some of those tariffs go down.”
As the country is battling one of its worst crises, German Chancellor Olaf Scholz has repeatedly called for closing the deal saying that: “The Mercosur agreement is groundbreaking for diversifying and strengthening the resilience of our economy.”
It most certainly would strengthen the ailing German automotive industry, including struggling Volkswagen, BMW and Mercedes-Benz, as well as the German chemicals industry with companies like Bayer.
There’s reason to believe that the trade deal will not be a panacea for German industry. Aside from the country’s energy disadvantages due its Russia policy, China already has a heavy presence in South American auto market that appears poised to grow. From the Buenos Aires Times:
Chinese vehicle makers have pushed pedal to the metal in recent years. With multiple brands that combine price and quality they have managed to conquer the Latin American market, rising ahead of the United States and Brazil. In the last five years, China has quadrupled sales to the region. In 2019 it sold US$2.18 billion of cars, in 2023 it hit US$8.56 billion and 20 percent of the market to become the main supplier to Latin America, according to the ITC International Trade Centre.
The United States, which boasted the first position in 2021, reached 17 percent, whereas Brazilian vehicles dropped from 14 to 11 percent of the market last year.
In the budding market of electric vehicles, the dominance is even greater: 51 percent of sales in the region were from the Asian giant, while practically all electric buses are Chinese.
France is leading the opposition to the deal, and demanding that Mercosur farmers be subject to the same requirements as their EU peers. Much like its EU counterpart Germany, which opposed the EU tariffs on Chinese-made EVs, Paris knows its stance is largely symbolic as it doesn’t likely have the votes to shut the deal down.
“The government says publicly that they are opposed, but behind the scenes, they acknowledge they don’t have the strength and pretend to fight,” said Manon Aubry, an anti-Mercosur French MEP from the France Unbowed movement.
The reason France and other countries against the agreement are stuck is due to some clever maneuvering from the Ursula von der Leyen-led European Commission. Under normal circumstances, the deal would need to be ratified by all 27 EU member states, the European Parliament and all bloc national parliaments before taking effect.
The Commission, however, is splitting the deal into two parts: a broad cooperation agreement and a trade pact. This apparently allows it to skate through with a qualified majority of at least 15 member states to approve the agreement.
And according to political watchers, Paris lacks the ability to pull together the qualified minority — representing at least 35 percent of the EU population — that it would need to block the deal when it finally goes to a vote among member countries.
Supporters and Ursula’s Commission are saying the deal needs to get done posthaste. Because if not the Mercosur countries will turn their backs on the EU and march down the aisle with China instead.
“If we don’t do a trade agreement with [Mercosur], then this void will be filled really by China,” incoming EU foreign affairs chief Kaja Kallas said recently.
The European Commission and Mercosur countries aim to conclude their long-running negotiations on a trade accord at a Mercosur summit next week, according to Politico.
Agriculture Risks
European farmers are sounding the alarm about the dangers in the deal not just to their economic well being but the general well-being of all Europeans.
That includes European food safety, animal welfare, and environmental standards and pay higher wages compared to that of the Southern American farmers.
European agricultural organizations are pointing to the lax standards of Mercosur exports compared to EU regulations. From Tri-State Livestock News:
DG SANTE’s audit highlighted significant gaps in Brazil’s ability to trace hormone use in its cattle exports to the EU, particularly estradiol 17β, a growth hormone widely used in Brazil but banned in the EU for over 40 years due to its potential cancer risks.
Despite these findings, the EU Commission has allowed Brazilian authorities to implement a ‘self-ban’ until they can guarantee hormone-free beef exports to Europe.
This decision has raised serious concerns about the adequacy of oversight and the reliability of Brazil’s self-regulation, especially considering the recent ‘Carne Fraca’ scandal which exposed severe regulatory failures in the Brazilian meat industry.
In addition to the livestock, there a major concerns about the safety of arable products:
Recurring difficulties in Brazil restricting the use of hazardous plant protection products and the increasing differences in terms of phytosanitary standards between Brazil and in the EU, makes the situation unsustainable and unacceptable for EU farmers.
For example, a forthcoming CEPM study shows that 52% of the active substances authorized for use on maize in Brazil and Argentina had been banned in the EU, some of them, such as atrazine, for over 15 years.
As far as sugar beet is concerned, there are around 30 active substances authorized in sugar cane in Brazil that are no longer authorized for use in sugar beet in the EU.
These differences cannot be explained only by different conditions such as climate, soil, or mitigation measures. EU farmers say an active substance considered dangerous for health or for the environment in the EU should also be considered dangerous in Mercosur countries.
No matter, Politico tells farmers to “calm down.” It’s no big deal says the outlet owned by Axel Springer, which excludes Politico employees from the requirement at its other media outlets to sign a mission statement expressing support for Israel transatlanticism:
…the tariff-free quotas Brussels has afforded the South Americans are low. For beef, these account for 1.6 percent of Europeans’ annual consumption by volume and a smidge more by value. It’s even less for poultry and sugar, which by volume weigh in at 1.4 percent and 1.2 percent respectively. Rice is below the single digit.
This of course ignores the fact that multinationals can easily absorb while already-struggling small scale farms could be sunk by even a small increase in unfair competition, which is precisely what free trade agreements do and thereby aid corporate concentration at the expense of small and medium enterprises. And I’m sure they’d never try to increase the quotas.
The deal is a big win for the evermore globally concentrated Big Ag. According to SOMO, “in the last three years, the profits of the five biggest traders in agricultural commodities tripled compared to the years before. Together, ADM, Bunge, Cargill, COFCO and Louis Dreyfuss Company (ABCCD) hold a monopoly position on the global market.”
It’s soon to get even worse. That’s because the EU and Ursula, who loves her tools, isn’t a fan of utilizing the competition policy toolkit. From SOMO:
…since the start of the EU Merger Regulation in 1990, only 88 out of 9243 notified mergers have been stopped. That is less than 1 per cent. Sixty cases that European regulators considered – and approved – involved the ABCCD agricultural commodity traders, including the 34-billion-dollar deal [inked this year and set to close in 2025] between agricultural giants Bunge and Viterra.
On the South American side, there are strong reasons to believe that the deal will lead to the following:
- More fires and deforestation in the Amazon.
- Escalation of invasion of indigenous territories, land-grabbing and violent attacks.
- A disruption of local food production.
- Increased use of dangerous pesticides.
Why Does the EU Ruling Class Want the Deal?
Trade between the two blocks is relatively small. European Commission data shows that in 2023 the EU’s exports to the four Mercosur countries was 55.7 billion euros while Mercosur exported 53.7 billion euros worth of goods to the EU.
European farmers are in effect being asked to sacrifice supposedly for the EU — and America’s — strategic goals. The strategic aspect revolves around China and critical minerals.
While agriculture products are the largest slice of the Mercosur exports to the EU (32.4 percent), mineral products are second at 29.6 percent. The South American countries have plenty of what the EU is looking for, including lithium, graphite, nickel, manganese, and rare earth elements. The EU is currently almost completely reliant on China for minerals needed for EV batteries, solar panels, wind energy, and green hydrogen — all part of the bloc’s flailing green transition.
Even if the EU is able to secure more critical minerals from Mercosur with this trade deal, who will do the processing? There’s still no clear answer. Von der Leyen likes to tout her tools like the bloc’s Net-Zero Industry Act (NZIA), which aims for the EU to process 40 percent of the strategic raw materials it uses by 2030. The NZIA allows projects to bypass many environmental and social impact reviews, but there’s no budget, and the policies do nothing to change Europe’s disadvantages, which include a lack of subsidies compared to the US and China and much higher energy costs thanks to their “de-risking” away from Russian energy.
Yet the “de-risking” — code for the EU’s eager role as a US proxy in the fight against Russia and China — continues.
Thus far, it’s mostly been a disaster on every level — strategically, economically, and environmentally.
The EU has yet to halt the rise of China (and Russia) with its derisking efforts. Far from it as both are likely stronger than before. Meanwhile, the EU is now wholly reliant on the US economically, militarily, and energy-wise.
Everyday brings worse economic news from across the bloc. The Swedish battery developer and manufacturer, Northvolt, last week filed for bankruptcy.
More frequently the bad news comes from the EU’s economic engine: Germany. Thyssenkrupp, the country’s largest steelmaker, proposed on Monday to cut 5,000 jobs and outsource another 6,000 is just the latest example.
The 2024 European Commission State of the Energy Union report touts that “With the Net-Zero Industry Act (NZIA) and the Critical Raw Materials Act, the EU took action to strengthen the competitiveness and the supply chain resilience of its clean energy technologies manufacturers.”
It offers no examples but amazingly notes that it “has swiftly acted by strengthening its international partnerships…but also by inviting strategic reflections of Mario Draghi and Enrico Letta.”
Over to you Signore Draghi. His much-anticipated September report managed to obfuscate the biggest reason the EU is suffering from a competitiveness crisis: its decision to cut itself from pipeline Russian gas. And his solution is not to rethink that choice but to double down on it while also gutting labor laws and embracing AI and more concentration.
On the green front, well, it’s anything but. The EU derisked from Russian pipeline gas, which plays a major role in the economic disaster currently hitting the bloc, and in the process dramatically increased its reliance on liquefied natural gas (LNG). According to the Institute for Energy Economics and Financial Analysis, “since the beginning of 2022, Europe has increased its LNG import capacity by 23%, or 58 billion cubic metres.” Much of it comes from the US.
Here’s the problem: the planet-heating pollution from American LNG exports is worse than that of coal. That’s because the production of shale gas, as well as liquefaction to make LNG and transport it by tanker, is energy-intensive.
Somehow these derisking plans always seem to screw over European workers while simultaneously failing to achieve any of the other goals, but the wealthiest continue to make off like bandits. It’s almost like that’s the point.
It’ll be the same with any EU-Mercosur deal.
That’s a small price to pay, according to the DC-based Center for Strategic & International Studies (CSIS), a think tank funded by the likes of the Charles Koch Foundation, Bank of America Corporation, Northrop Grumman Corporation, BP, Citigroup, Facebook, Johnson & Johnson, Microsoft, Raytheon Company, Amazon, Apple, IBM, and Disney. Here’s Lauri Tähtinen, a non-resident senior associate at CSIS, discarding any concerns with the trade deal and gifting us with his wisdom:
At a higher plane, both parties should wish for the conclusion of an agreement and so should the United States, as it shares an interest in the orientation of both EU and Mercosur countries away from China. This is because the rapid decline of U.S. trade in South America (in both absolute terms and relative to China) has also contributed to democratic backsliding. This does not mean that, in the world of diplomacy, the United States has an easy time advocating for two parties to reach an agreement that it is unwilling to arrive at with either party. In the world of trade diplomacy, it is also clear that some lobbies within the United States will be marginal losers if an EU-Mercosur deal is concluded.
This is why the role of trade diplomacy needs to be placed within a broader context. When Washington itself no longer looks to conclude trade deals, their broader benefits should be sought by proxy, as happened when a Japan-led coalition saved the Trans-Pacific Partnership (TPP). In the case of EU-Mercosur, both blocs have demonstrated that they remain capable of arriving at free trade agreements (FTAs), at least, with the correct, smaller counterparty.
So take comfort, European readers, as your standard of living continues to decline or if your farm goes bankrupt or if the imported agricultural products you ingest give you cancer. You simply don’t understand how trivial your concerns are because you’re not on “a higher plane.”
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Thank you, Conor.
Conor’s concludes with: “So take comfort, European readers, as your standard of living continues to decline or if your farm goes bankrupt or if the imported agricultural products you ingest give you cancer. You simply don’t understand how trivial your concerns are because you’re not on “a higher plane.”
Last week, I attended a conference in the City and heard former colleagues from a trade association and consulting firm say they expect the Eurocrisis to return as growth rates and political outlooks diverge between the core, Germany and (“protectionist”) France on their knees, and the periphery, formerly struggling.
It was interesting to hear how often the City and Commission engage, not that any form of rapprochement is on the cards. City opinion is slowly, but surely turning against membership, if only to protect its privilege*.
*That privilege includes almost weekly engagements with the Treasury and No 10 and influence over policymaking. “90% of our recommendations have been accepted” with regard to watering down the post 2008 crisis reforms. That also includes putting the City, not the government and even civil society, in the driving seat to achieve net zero.
We peasants have no such access. I counsel those able to leave to do so. My parents, both 80 this month and here for over 60 years, and I are preparing to leave in the next couple of years.
I forgot to add that the agricultural commodities clearing bank arm of my EU bank employer will welcome the trade deal. It’s one of the firm’s crown jewels and coveted by larger rivals.
Yesterday morning, said employer announced the closure of its asset based finance and SME banking arms in the UK and Germany.
With regard to the UK, that’s about 100 jobs in London, Manchester and Brighton and the closure of the Manchester and Brighton offices. The division has been struggling over the past year or two. Moving up the food / value chain proved insurmountable. Clients typically sub-contracted to big construction firms and local authorities and provided transport related services. Austerity, recession, high costs and the recent budget have done for the UK arm.
With regard to the German arm, clients tend to be part of supply chains. Corporate Germany is struggling. The impact of high energy costs and loss of markets have done for the German arm.
Thank you for these comments. Coincidentally my parents are also turning 80 at the same time – one last Friday and another in 10 days’.
The reference to core/periphery dynamics is very interesting. The EU is akin to many past empires, insofar as there is initially exploitation of the periphery and, at length debilitation of the core, such that weakness at the margins feeds back to the core and the empire eventually implodes.
Trade within the European core initially expanded rapidly after the establishment of the European Payments Union in 1950, but by the early 1970s satiety had been reached, making expansion of the market within the perimeters of the CET all the more necessary. Accession to the EC/EU soon crushed national import substitution models extant since at least the 1940s in peripheral member states. For a while demand in the periphery was sustained courtesy of financial flows from the core, but this was subject to diminishing returns as the periphery succumbed to increasing debt burden, impairing the effectiveness of peripheral countries as vents to manufacturing surpluses generated by the core. These diminishing returns fed back to the core, making the core that much more dependent upon export markets without the CET which were, perforce vulnerable to retaliation and/or movements up the value chain by extra-European competitors. This vulnerability could be reduced for a while by means of internal devaluation, such as Hartz IV, but that too was subject to diminishing returns. Now the intra-European market is exhausted and/or sated, and extra-European competitors are unwilling to function as vents for European goods. The crisis of the periphery has now become the crisis of the core, and implosion may result.
Moreover, as foreign policy is invariably the outworking of domestic tensions, the increased bellicosity of European policymakers is a symptom not so much of exogenous threats as of endogenous crisis. Indeed, the very extremity of European foreign policy has become a striking symptom of just how profound the internal crisis of Europe has become. Perhaps the anxiety to strike a deal with South America also reflects the decline and fall of European influence in Africa – Europe needs South America as a substitute for Africa, but the signs are that South American countries will play off China against Europe, meaning that Europe will not get the discounts on raw materials which it needs in order to remain competitive.
However, given the trajectory of the West, where should those of us who are mobile (as I am not) move to?
Many thanks again.
Thank you.
You should think about Mauritius. Many French and American retirees. Some younger French workers. Some South African retirees. Many more still working.
Thank you for the tip! It seems tempting, especially as I examine my heating bill.
Thank you. I can imagine.
Well a lot of that empire fraying at the edges is because most maritime empires are built around a capital with port and trade Finance leading to a concentration of banking and legal services – though of course the latter are always near the royal palace and government apparatus
Nowadays these financial capitals such as NYC and London and Hong Kong and Amsterdam have detached from their local base to play footloose around the planet and so too have arms manufacturers and politicians
I see this reflected in businesses like M&S in U.K. once Sieff family stepped and let manager class like Richard Greenbury take control it was into Financial Services. With such high and easy returns from unregulated loan rates the margins on clothing look paltry so in comes McKinsey with its outsourcing presentation and bye-bye to U.K. textile manufacturing and M&S reputation for quality
That in a microcosm is the fate of the West
Whatever happened to EU working to improve the lives of its citizens?!?
Claude Juncker gave me free roaming in EU – nice
Ursula von der Misery i mean Van der Leiden has so far given me nothing but sleepless nights
Time to de-localize in South América?
‘Chief negotiators from the EU and the Brazilian-led South American bloc of Mercosur countries are meeting in Brasília this week for final talks on their trade agreement that’s been under discussion for a quarter century.’
And there it is. The Mercosur countries couldn’t get the deal done but now that China is making serious inroads into South America, the EU is falling over itself to get a deal signed. What’s the bet that there will be all sorts of booby traps for the EU in that deal. I thought it a bit strange as the US had declared South America to be for the exclusive use of the US – just ask ex-general Laura Richardson about that – and would not welcome a competitor. But then it occurred to me that if this deal played havoc with the EU, that the US will see that as a win for itself as the EU is still a competitor to the US.
“But then it occurred to me that if this deal played havoc with the EU, that the US will see that as a win for itself as the EU is still a competitor to the US.”
And the EU is probably counting on the USA to keep control of “security” in South America.
Also, consider the exports to South America from Europe. How many will actually have a more final destination to North America?
Also, consider the exports to South America from Europe. How many will actually have a more final destination to North America?
I should think ZERO. Brasil for instance has huge Mercedes do Brasil and VW factories – even Lula worked in one ! German companies need tariff free imports on Sub-assemblies and components…….it is not always finished goods. VW exports to Argentina but was paid on barter basis with Malbec wine which filled German stores…….
Noone wants US in South America – talk to people there……”Yankee Go Home”………why do you imagine US troops operating in Colombia are loved ?
EU simply wants markets and Brasil was always a major German investment point for Siemens going back to early 20th Century
In the quote from the propaganda from the crimethinktank at the end, the example of international cooperation cited was the Trans-Pacific Partnership. Apparently that was saved by the wise and totally independent one-party-state of Japan. But, hey, Wikipedia tells me that the TPP was never ratified — just as I remembered.
Am I on a parallel universe, or is it them?
I believe CSIS is referring to the CPTPP, which came out of the TPP talks sans US https://en.m.wikipedia.org/wiki/Comprehensive_and_Progressive_Agreement_for_Trans-Pacific_Partnership
I doubt BASF cares since they can ship from US facilities. It is the nature of global operations. Besides the huge integrated plant in Ludwigshafen has already dismantled 24 product lines for shipment to China. I know people there who say they make chemical products not allowed to be sold in EU so why produce in Germany where BASF lost €1.6 bn last year and has been loss-making for years
They gave outflagged whole sectors outside the Vetriebsbund which makes it easier to fire and close down product lines.
If you think Brasil is happy ask why Carrefour is banning Brasilian beef in its outlets
Belgium is just as hostile as France and so is Netherlands and Poland. France and U.K. are only countries raising beef cattle to eat as opposed to calling milk cows „beef“ as in Germany – Charoluxe is a brand
Mercosur is being pushed to counter BRICS but it will not fly. EU is big on words and little happens
Alexandre lied to the French and they, gullible as always, believed him. Carrefour in France has never purchased Brazilian beef. In fact, France as a whole accounted for only 0.00476% of Brazilian beef exports between January and October of this year. It is insignificant! And the agreement with Mercosur will not change this situation, because the quota system will continue to be very restrictive. As always, propaganda war, political games, etc…
it is just a posture of Macron for its domestic image (“vous voyez, nous avons essayé d’empêcher le traité!….”). In fact Macron’s gang, basically a lieutenant of the Rothschild and in ties with Blackrock, etc, has willingly sold away many industrial French assets since his time under Hollande and is doing the same with agriculture. French agriculture is shrinking since long, because the intra-EU competition from cheaper Eastern new members and to the advantage of Germany, among others. Most cattle and milk producers are chronically in debt, turned slaves of agro-groups, suicide is rampant, and government doesn’t care. The Ukraine operation was just another Drang nach Osten, USA and EU had to share the assets and Germany would get some agronomic, it has been in the making since actually 2004/2005, see Steinmeier…
this article is a great, well put together summary. What is not stressed enough is that this trade idea is not really a EU sui generi thing: it is the EU Commission doing what USA wants.
American public is typically not interested in these topics, don’t feel concerned and anyway doesn’t know about. In fact it´s half about them, because what we see is a so-called West (moniker and loose ideological flag of the Anglo-Germanic elements) closing ranks tighter under pressure.
In order to maintain its living standard USA needs customers and what it sells is not cheap so customers must have some buying power. American oligarchy has forced EU to cut ties with Russia and is conflicting China, it is also scaring away everybody because the destruction of massive energy infrastructures (Nordstream) and the plain robbery of a country’s central bank (Russia). USA behaves like a brutal vampire out of control and what it is doing with EU is sucking its blood. In order to keep going EU in turn needs to suck someone else blood. They try South America. Possible victims are less and less, when EU dries up, US vampire will have a problem.