The word Mercosur comes from Mercado Comun del Sur, which means Southern Common Market.
A common market is established when a bloc of countries agree to take away trade charges between themselves and share a trade tariffs when trading with other countries, the bloc act as a single economy and the things needed to do business, like capital and services, can be shared across borders.
Ireland is part of the EU common market, which allows Irish businesses to buy and sell to other EU countries without significant tariffs. Countries outside the EU have to negotiate trade agreements with the EU on an individual basis. For example, before the controversial EU-Mercosur deal a tariff of up to 55% was applied to agricultural products being sold to Mercosur countries. In practice, such tariffs meant that relatively few products were traded between the EU and Mercosur countries.
Mercosur is not just the name of the trade deal but is South America’s version of the EU. It was formed in 1991 and like the EU has a customs union which allows people, goods and services to pass freely across national borders. The countries in the Mercosur customs union are Argentina, Brazil, Paraguay, and Uruguay.
The EU-Mercosur trade deal
The EU-Mercosur trade deal has been in the works for 25 years. If passed the deal will create the world’s largest free trade area of around 700 million people between European and South American countries.
For Ireland this would mean tariffs will be phased out or set at 0% for machinery and electrical equipment, transport equipment, medical equipment, and chemicals/pharmaceuticals. Likewise, tariffs on agricultural products will be ‘substantially reduced’ or set to 0% on some products. In all, the EU-Mercosur deal will remove 91% of tariffs across all EU products, while the EU will eventually remove 92% of tariffs on products coming from Mercosur to the EU.
Customs procedures will be simplified or removed, allowing for smaller Irish businesses to buy and sell directly into Mercosur countries. According to the EU, Irish businesses will also be allowed to bid for public contracts, which could, for example, see Irish companies do construction work in South America. The services sectors will be opened up in areas such as finance, couriering, telecommunications, transport, digital trade, and environmental services.
On Friday January 9 last, Ireland voted against the EU-Mercosur trade deal at EU level. France, Austria, Hungary and Poland also voted against the deal. 21 other member states voted for the deal, including Germany, Italy and Spain; while Belgium abstained.
These results mean that a qualified majority was achieved to pass the vote in principle. A qualified majority is when 15 of the 27 EU members vote in favour of a proposal and these countries make up at least 65% of the total EU population.
In recent months Italy is reported to have been persuaded to vote in favour. This means the in favour side now represent more than 65% of the EU population, giving them the effective majority they need to move forward with the deal.
Irish Resistance
Ireland has been against the EU-Mercosur trade deal since its conception. Although the Irish business community recognises it would be good to sell into South America, other sectors, such as farming, are deeply concerned that these South America countries will also be allowed to sell into the EU and Ireland.
For decades the EU is thought to have the strictest policies in the world policing how its countries produce food. This means that EU produced food tends to be more expensive but higher quality.
It is widely reported that Mercosur countries do not have the same strict policies policing their food production. There are concerns that while the EU will continue to enforce strict laws in their member countries, it will be effectively impossible for them to enforce similar laws in Mercosur countries.
This could allow Mercosur countries to sell lower quality food into EU at lower prices, which may lead to the collapse of farming industries. There are also concerns that harmful hormones and ingredients that are illegal in the EU will be introduced into the Irish food chain.
After 25 years of deadlock, the EU-Mercosur trade deal that provisionally passed on Friday 9 last, included protections to try and get Ireland to vote in favour. These include a limit on the amount of Mercosur meat that can be sold in Ireland. These include: 99,000 tonnes for beef, 25,000 tonnes of pigmeat and 180,000 tonnes of poultry per year.
With reports from the Central Statistics Office suggesting that Irish consumed around 133,000 tonnes of beef in 2024, these safeguards did not reassure the farming industry as South American beef could still supply around 74% of Ireland’s 2024 market.
The EU-Mercosur deal must now be ratified in the EU Parliament. Those at the top are confident this will happen despite considerable, ongoing resistance.
AARON KENT
Funded by the Local Democracy Reporting Scheme
