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EDA happy with EU-Mercosur deal, EMB not so much

By Jim Cornall contact

- Last updated on GMT

The EDA has praised the deal between the EU and Mercosur. Pic: ©Getty Images/a-poselenov
The EDA has praised the deal between the EU and Mercosur. Pic: ©Getty Images/a-poselenov

Related tags: Mercosur, European union, eda

The European Dairy Association (EDA) said it welcomes the comprehensive trade agreement as concluded between the EU and Mercosur (Argentina, Brazil, Paraguay and Uruguay).

However, the European Milk Board (EMB) was not so impressed by the deal.

After two decades, Mercosur and the European Union have reached an agreement on the trade environment that covers more than 780m citizens.

A lot of work has been done since the beginning of the negotiations and EDA acknowledges the efforts of EU Commissioner for Trade Cecilia Malmström and EU Commissioner for Agriculture & Rural Development Phil Hogan. The future implementation of this new trade framework, part of a wider Association Agreement, will be beneficial for the two economies.

“In today’s troubled international trade arena, this is a real breakthrough that underlines the trade ambitions of the European Union (‘Trade for All’) and the performance focus of the negotiation teams. The clear commitment of the negotiation partners to the Paris Agreement (COP21) and its objectives is in today s world a milestone,”​ EDA secretary general Alexander Anton Anton said.

“The Mercosur trade agreement will basically allow to uncork some of the potential of these markets. The agreed TRQ volumes of 30,000 tons of cheese is about ten times the quantities we export today. This additional market access will also help to underpin the diversification of our EU dairy export destinations and hence, make the dairy sector more resilient when it comes to trade distortions.

“It is not a secret that we would have expected higher TRQ volumes for cheeses, milk powders and infant formula, and a shorter phasing period than 10 years. On the other hand, trade negotiations are more than complex and difficult – so far, nobody has yet succeeded in getting a deal that makes everybody happy.”

Legal safeguards

From a dairy perspective, the EDA said all four countries forming the Mercosur area have a great dairy culture, with a self-sufficiency rate between 90% and 193%. So far, dairy trade has mainly taken place within the Mercosur region. The cheese and powder imports from the EU (mainly from the Netherlands, France, Italy and Germany) have not reached a significant volume.

Anton said it is now essential that the details of the agreement and the final implementation can secure an unhindered access for European dairy exports, including the reduction and abolition of tariffs as well as non-tariff barriers.

Anton added that the adopted legal safeguards to protect more than 350 high-quality European food and drink products like Fromage de Herve (Belgique) or Comté (France), from imitation in Mercosur countries will also strengthen the reputation of all European dairy products.

EMB misgivings

EMB vice-president Sieta van Keimpema said, however, the deal is problematic for dairy producers and could further increase the existing overproduction in the dairy sector.

The high quantity of soya imports is one of the reasons for the damaging overproduction in the EU. The planned reduction of Mercosur export duties is expected to lead to even higher soya imports to the EU, which could exacerbate EU surpluses even further.

"We milk producers in the EU have been working for years to make the dairy sector resistant to crises and future-proof once again. The Mercosur Agreement, unfortunately, counteracts these efforts,"​ van Keimpema said. 

"Furthermore, these agricultural products, which will now come to us in Europe in even greater quantities, are different from those produced in the EU in terms of standards and production requirements. This leads to unfair competition to the detriment of EU producers,"​ van Keimpema added.

"And of course, we have to wonder to what extent at least guaranteed conditions for EU consumers will really be respected.

"The decreases in tariffs for EU milk products pose the threat of stifling milk prices for dairy farmers in the South-American countries as well. While our association represents European milk producers first and foremost, we also want to ensure that the price situation for our colleagues in the Mercosur region does not deteriorate."

To add to this, she points to the current developments in Brazil, the largest Mercosur economy.

"The government's handling of human rights as well as its environmental decisions are being met with significant criticism worldwide – something that we echo," van Keimpema said.

As one of the points of major concern she mentioned the increased felling of the rainforest since the beginning of 2019.

Venezuela is also a full member of Mercosur, but has been suspended since 2016.

Related topics: Markets, Emerging Markets

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