Chicken with GMOs, beef under XXL growth and meat priced as smoky as barbecue… The upcoming agreement with Mercosur, debated more than ever within the European Union, is provoking the anger of farmers in France. The latter denounce “unfair competition” with prices impossible to reach in Europe, as well as much less strict standards on products.
But beyond this thorny question, this future agreement presents many advantages for the EU and, by extension, France. It’s time for a little geographical-economic reminder: Mercosur, abbreviation of the “southern common market” (Southern Common Market), brings together six countries – Brazil, Argentina, Uruguay, Paraguay and Bolivia. That is to say a commercial area of 280 million consumers. A market currently protected by customs duties that are not really welcoming: 35% on cars, up to 30% for wine, champagne and cognac, 14 to 20% on machines, 18% on chemicals .
An offensive Europe in many sectors
“The agreement would reduce customs duties by 90% between Mercosur and European Union countries,” explains Bernard Keppenne, economic head of CBC Banque. “There would be many potentially winning sectors, where Europe has an offensive position, such as cars and industry,” continues Charlotte Emlinger, economist specializing in trade policy at the Center for Prospective Studies and International Information (CEPII). ). The Mercosur agreement is therefore sometimes caricatured as “meat for cars”.
“The matter is all the more important for Europe after the election of Donald Trump,” notes Bernard Keppenne. The future American president has in fact indicated that he wants to drastically increase United States customs duties, making European exports much more complicated. Well, but let's not lie to ourselves, cars are mainly exported by the Germans. So what would we gain, the French? The Mercosur agreement could notably relieve the wine and cheese sectors. “These areas are likely to suffer from exports with customs in the United States, and could rebound on the other side of the Equator,” supports Charlotte Emlinger. Same scenario for luxury or pharmaceuticals, two sectors increasingly in demand in Latin America with the development of the middle class there.
Rare trade surplus
Especially since Europe today has a favorable trade balance with America: it exports more products than it imports. “The agreement itself is quite lopsided in favor of the European Union. It has lower customs duties – therefore for which there will be less impact – and it will be able to export much more products in value,” estimates Bernard Keppenne.
Same case for France, which nevertheless has a very significant overall trade deficit (-99.6 billion euros in 2023), but a trade surplus with Latin America – rare enough to be underlined.
Paris is currently not exploiting this booming market much. Thus Brazil – a growing country of 210 million inhabitants, with increased demand – is only our 27th customer and represents only 0.733% of our exports. Still, lowering customs duties will have a limited effect. “This remains a very distant commercial area, and this market opening will remain insufficient to fill our trade deficit,” specifies the specialist.
“Good news for consumers”
Another element to take into account: in South America, the Old Continent is being completely stolen by China, which already signed its own free trade agreement two years ago. In 2024, Mercosur countries will import more than $63 billion in goods from China, compared to $45 billion for European products.
Finally, the last key fact, more than chicken on estrogen and beef at knockdown prices, the agreement should facilitate the importation into Europe of strategic materials such as copper and lithium, essential for batteries. Charlotte Emlinger concludes: “This will definitely be good news for consumers in both shopping areas, with lower prices. »
