“Check against delivery”
Honourable Chairman,
Honourable Members of the European Parliament,
Ladies and gentlemen.
I also want to express my best wishes for the New Year. This year will indeed be an extremely important one for the agenda for which this Committee is responsible.
During my confirmation hearing, I pledged to come and have a thorough discussion with you on the facts and figures of the EU-Mercosur Partnership Agreement once negotiations were finalised.
Those negotiations, as you know, were finalised in December. This is a win-win agreement which paves the way for new export opportunities for EU companies. It can also boost our economic security, notably by developing resilient value chains in strategic sectors, such as raw materials, and contribute to our shared, ambitious sustainability commitments. And I can confidently tell you that the deal reached is better than the one reached in 2019.
Before explaining in detail the exact elements of the deal I want us to take a step back and look at the big picture.
Trade agreements are not just about economics. They are a way to build and strengthen communities of shared values.
The bond between Europe and the Mercosur countries is truly one of the strongest in the world. It is a bond anchored in trust and enriched by a shared heritage.
In our increasingly confrontational world, we must demonstrate that like-minded partners can rely on each other and work to achieve something meaningful together.
The EU-Mercosur Partnership Agreement delivers on this imperative. We both believe that openness and cooperation are the true engines of progress and prosperity.
And this agreement puts these beliefs and principles into action. It is a bold signal to the world that we will not be steered off course from our fundamental values and economic interests.
Quite the opposite: the successful conclusion of the EU-Mercosur Partnership Agreement proves that regional blocs can commit to shared values and advance joint efforts to deliver concrete results for the mutual benefit of our citizens.
This agreement offers us the unique opportunity to create a market of over 700 million consumers and to build on our place as Mercosur’s number one source of Foreign Direct Investment. It increases our efficiency by enabling the EU to tap into the growth potential of other regions, and by providing access to the inputs that our economy needs to advance on the green and digital transitions, such as critical raw materials.
It also contributes to making us more resilient to potential economic disruptions, as we are diversifying the EU supply chains to acquire inputs from a wider range of partners. As such, the agreement is an invaluable and intrinsic part of our over-arching policies to de-risk via trade diversification, and to ensure our long-term industrial competitiveness.
As you start your process of analysis and assessment, details are of course key, but I would ask you not to lose sight of the overarching geopolitical importance and role that this deal can play in delivering on our broader objectives.
Let me now turn to the tangible economic gains.
Among its benefits, the agreement will:
- Enhance competitiveness for EU businesses: The reduction of Mercosur’s high tariffs will significantly boost the competitiveness of EU companies in Mercosur markets, opening up new opportunities across diverse sectors and enabling EU exporters to save over 4 billion euros annually in customs duties. This is the biggest agreement ever concluded by the EU, four times bigger than the one concluded with Japan.
- Second, the agreement will also simplify customs procedures: Streamlined customs processes will facilitate smoother trade flows for EU exporters – especially crucial for the more than 26,000 EU small- and medium-sized enterprises currently exporting to Mercosur.
- Third, we open public procurement opportunities: EU firms will be the first to have access to public contracts in Mercosur countries on equal terms with domestic companies, at both federal and state level. For example, the procurement market of Brazil at federal level alone is worth more than 8 billion euros annually.
- Fourth, we secure access to key raw materials and green goods: By ensuring a steady, safe, and sustainable flow of essential raw materials, the agreement supports the EU’s commitment to the global green transition and underpins growth in environmentally friendly industries.
- Finally, we bolster economic security and supply chain resilience: The EU relies heavily on imports for its needs in raw materials. Having preferential access to them is of paramount importance. The agreement prohibits export taxes for most critical raw materials. It also bans export price requirements and export monopolies. This will enhance the EU’s economic security, increasing resilience and safeguarding critical imports essential for European industries.
Now, turning to the balanced outcome in the strategic area of agri-food trade – which we approached with the utmost care and attention
I remain convinced that we have reached a balanced partnership on market access in agricultural products.
The Partnership Agreement considerably improves market access for many EU agri-food products in a market of 280 million consumers with growing purchasing power.
Currently, EU agri-food exports face tariffs ranging from 10 to 35% in Mercosur countries. The Partnership Agreement will eliminate or reduce high duties for key EU agri-food exports including wine and spirits, olive oil, malt and chocolate.
In addition, the Partnership Agreement will provide for zero-duty TRQ for sizable volumes of several dairy products such as cheese, milk powder and infant food.
Finally, 349 EU Geographical Indications will be protected in the Mercosur countries, which makes this agreement the most comprehensive agreement ever negotiated for protecting European food and drinks. These include not only wine and spirits, but also iconic European food products like Comté and Parmigiano cheeses, Szegedi szalámi from Hungary or Polska vodka from Poland. Given the size of the market, protection of EU GIs in the Mercosur countries is a major step forward in promoting EU GIs worldwide.
In sectors where our interests are more defensive such as beef, poultry, sugar, and ethanol, we have negotiated clear and well-calibrated tariff quotas, as well as a gradual implementation to market opening.
Therefore, this agreement brings benefits to ALL sectors of the economy, including the agri-food sector. This is NOT an Agreement where agricultural concession pay for market access in other sectors. It strikes a cautious balance between the EU’s offensive and defensive interests in agri-food trade.
Having said this, I am fully aware that EU farmers are concerned about the potential impact of this Partnership Agreement on certain agricultural sectors, which are already confronted with difficulties.
Let me assure you that the Commission took these concerns very seriously in negotiating the Partnership Agreement. This is why the EU cautiously negotiated clear limits to the requests by Mercosur to open our beef, poultry and sugar markets.
The cumulative impact effects originating from other free trade agreements (FTAs) were also taken into account when deciding on the volumes of the quotas to be offered to Mercosur.
On beef in particular: The market opening for beef will be within reasonable limits:
The quota of 99,000 tons actually amounts to half of the volumes that are already being imported now from Mercosur.
This quota with a reduced tariff rate of 7.5% will be phased in over a period of 7 years: this is the famous one steak per EU citizen per year quoted in the press, which will enjoy preferential access once the EU-Mercosur Partnership Agreement fully enters into force.
Furthermore, this quota is divided between frozen (45%) and fresh meat (55%). Frozen meat does not target the premium market but is rather destined to be transformed.
On poultry: The EU market for poultry has been growing annually on average by 1.8 % per year over the last 10 years. Moreover, the EU is a net poultry exporter.
We granted a duty-free quota of 180,000 tons opened for Mercosur countries; this is three quarters of what we already import annually from Mercosur. This is more or less equivalent to the annual growth in poultry consumption in the EU.
Moreover, only half of this quota is for premium quality (boneless) chicken, hence targeting the premium market.
And let me stress that in addition to the clear limits set out above, the Partnership Agreement contains bilateral safeguards, to protect the agricultural sector in case of import increases which cause, or risk causing, serious injury. These safeguards allow for the temporary withdrawal of tariff preferences, including for products covered by tariff rate quotas.
We will also put in place a new fund.
The experience of recent years has shown that the Commission has the necessary policy tools to intervene effectively in the market when the situation so requires.
The European Commission will monitor market developments closely after the agreement is implemented, particularly with regard to the agricultural sector.
In the unlikely event that the agricultural sector in Europe is negatively impacted following the implementation of the agreement, we intend to set up a reserve worth at least one billion euros. We see this like giving a warranty for a product; a producer gives a warranty exactly because it considers that its product is faultless. Likewise, we trust that the agreement will work correctly and not cause market disruption. Still, we wish to guarantee that there will be no negative repercussions for farmers and rural areas.
This additional ‘warranty’ serves as a contingency plan, ensuring stability for EU sectors even in exceptional circumstances. While unlikely to be needed, this safety net underscores the EU’s commitment to protecting its agricultural sector.
Turning to another crucial element: compliance with EU SPS standards.
Agriculture products imported from the Mercosur countries – and from any other third country, with or without trade agreements – must comply with the EU’s sanitary and phytosanitary (SPS) standards. Health and consumer protection was never, and never will be, up for negotiation.
When it comes to meat, such as beef, Mercosur countries, like any other country in the world, can only export to the EU if individual slaughterhouses can demonstrate that they fulfil the very stringent EU requirements. To this end, imports are allowed only from selected establishments validated by the Commission. Moreover, the Commission carries out regular audits in the Mercosur countries themselves, and, in case any non-respect of these EU norms is discovered, this leads to a stop in imports until assurances are given that the identified shortcomings in the origin country are settled. Currently, only a few establishments in Brazil and Argentina are allowed to produce meat for export to the EU.
A few words on sustainability.
We have listened to the concerns of the European Parliament, Member States and citizens and secured an outcome that aligns with our sustainability goals while preserving the EU’s sensitivities.
The Agreement includes the Paris Agreement on Climate Change as an essential element, allowing for a partial or total suspension if a Party leaves the Paris Agreement and also if it stops acting “in good faith”, i.e. undermines the Paris Agreement from within.
This is only the third EU FTA with such a clause. At a time when the US may be assessing whether to leave the Paris Agreement, this is a strong message in support of multilateral cooperation on climate change.
The Agreement also contains strong commitments on deforestation, including taking measures to stop further deforestation as of 2030. This is the first time that Parties agree to a legally binding commitment to halt deforestation. Until now, there were only political and collective declarations.
Honourable Members, let me conclude with a few words on the next steps.
Following a final legal scrubbing by both sides, the text will be translated into all official EU languages, and it will then be submitted to the European Parliament and Council for their scrutiny in the context of the EU’s ratification procedures.
So, the political conclusion of the negotiations is not the end of the process. It is actually the beginning of a healthy political discussion about the opportunities this agreement may offer. I am here to explain why the Commission believes that we need this agreement and why we stand behind its details. I am keen to continue my personal engagement with you – as well as with all other stakeholders – over the next months. I will listen to your concerns and will do my best to reply with facts and figures.
Thank you.
Source – EU Commission