The Malta Independent 22 August 2019, Thursday

Trade deal with Mercosur creates huge opportunities and upholds EU values

Monday, 22 July 2019, 11:56 Last update: about 1 month ago

Cecilia Malmstrom

On Friday 28 June the EU and the four South American countries that make up Mercosur – Argentina, Brazil, Paraguay and Uruguay – clinched an historic agreement to break down trade barriers and set strong common rules.

Like all trade deals, it offers opportunities for EU companies to sell their goods and services on foreign markets. However, when those markets contain around 260 million people, you have to sit up and take notice.

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The EU is now in pole position to take advantage of these expanding markets. The four countries remain effectively closed to our competitors, who will continue to face high tariffs. This amounts to savings of over €4 billion for our companies – four times more than our recent deal with Japan.

This deal is also good for our companies providing telecommunications, financial, business and transport services, amongst others, who will be able to compete on a level playing field. EU firms will be able to bid for government contracts in the four Mercosur countries on equal terms as local companies.

More exports means more jobs. Extra exports allow EU companies to expand and hire more people. Our latest count says 36 million Europeans are in jobs supported by exports. 19,000 Maltese are in jobs supported by international trade. One in ten Maltese jobs depend on EU exports.

Smaller companies will have a dedicated online portal to help them navigate customs procedures and have all the information they need.

European farmers have a lot to celebrate in this deal. Due to our deep cultural and historic links, South American consumers have a taste for quality European produce. This deal slashes duties at the border for European wines, cheeses, chocolate and other high value products. Over 350 iconic food and drink names will also be protected from imitation. This safeguards our ancestral know-how and helps guarantee an economic future for Europe’s skilled artisan food producers.

Of course, we fully understand worries that farmers may have about increased competition in sensitive sectors like beef. However, the extra access we have given to our partners in these areas is very limited, especially when you look at it in the context of the EU market as a whole. For example, 99,000 tonnes of extra beef sounds a lot but it represents just 1% of the 8 million tonnes we eat every year. The same is true for sugar and poultry.

There are also safeguards in this agreement that can be activated just in case there is a sudden surge of imports that is damaging our producers. Nevertheless, since the EU-Canada agreement came into force we have not seen a wave of cheap imports as many feared. Overall, EU food and drink exports to Canada are up 7%.

Although we launched talks 20 years ago, we have radically changed the way we do trade policy in recent years, and this deal reflects that. Trade must not only deliver economic benefits, but also be transparent, sustainable and anchored in our values.

No matter where it is from, the food on our plates must abide by our high EU food standards. Nothing in this agreement changes that. The precautionary principle is also enshrined in the deal. This guarantees our right to keep a product out of the EU market if the science is not conclusive.

We believe transparency leads to better policymaking. National governments and MEPs have been informed every step of the way, and the full text of the agreement is online for every citizen to have a look at the details.

It is a myth that trade deals are all about free trade. In fact, they are complex and lengthy legal texts that set rules about how trade must be done. This agreement has a particularly strong section on sustainable development that will protect the environment and workers’ rights. Crucially, it locks in the commitments that we made in the Paris climate agreement. That includes, for example, Brazil’s promise to reforest 12 million hectares of the Amazon rainforest.

If our partners do not live up to these promises, the trade agreement gives us an extra tool with which to encourage them. Just last week, we launched a process with South Korea because we are not satisfied with the progress they have made on workers’ rights since our agreement came into force.

Let us look at the bigger picture. As we saw at the G20 in Osaka, international agreements have never looked so fragile. Some of the biggest players have lost faith and are looking to dismantle the entire system.

Together with the four Mercosur states, we instead decided to make a strong statement in favour of multilateralism – for open, sustainable, rules-based trade; and for international cooperation to tackle climate change.

 

Cecilia Malmstrom is EU Commissioner for Trade

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