Ratification of the agreement by the European Commission and the European Parliament is uncertain given the overwhelming environmental concerns. In an unprecedented move, the European Parliament symbolically rejected the deal in October because it was concerned about the environmental policies of the current Brazilian government. Because of these concerns, if the agreement is ratified and enjoys better market access, Brazil could face sanctions for any measures affecting the environmental services of its rainforest and other ecosystems. The EU-Mercosur trade agreement: impact on climate, food safety, pesticides and public procurement, 07.12.2020 The EU has a high ad valorem duty outside quotas for beef and beef products of around 60%. Under the agreement, the EU will market 99,000 tonnes of beef (55% high-quality fresh beef and 45% frozen beef) with a 7.5% tariff and remove the quota rate for the World Trade Organisation`s “Hilton” quota. (For more information, see the FAS report Comparing EU tariff rate quotas for high-quality beef.) The impact of the agreement on U.S. agricultural exports to MERCOSUR will be diversified and product-specific. The table above shows the important product categories with overlapping competitive interests and risk. The provisions of the EU-Mercosur Free Trade Agreement are at odds with ambitious climate action. If the agreement enters into force, it will lead to an increase in EU imports of primary agricultural raw materials from a region crucial for the conservation of global biodiversity and climate regulation. Due to the keen interest of the German automotive and chemical industries, the country was initially particularly interested in signing the agreement.
Germany`s position changed slightly in the summer of 2020 in the wake of the Amazon rainforest fires, but Merkle`s government appears to remain committed to the deal. German Foreign Minister Heiko Mass assured that they wanted to concretize the agreement and expressed the need to continue the process of dialogue between the two blocs. Nevertheless, growing support for the German Greens, who oppose the trade deal, could slow down ratification. In addition, according to the same EU factsheet, the agreement contains language on the “precautionary principle” and “the right of the parties to take or maintain precautionary measures to protect human, animal and plant health, even in cases where the relevant scientific evidence is insufficient”. The wording on geographical indications and the “precautionary principle” can serve as a model for the EU`s ongoing negotiations with countries and trade groups such as China, ASEAN, Chile, Canada, Australia and New Zealand. The agreement is of particular importance to the EU due to Mercosur`s high tariff barriers in key areas of bilateral trade. The EU has a comparative advantage over Mercosur by providing higher technological content, so that European exports mainly include chemicals, pharmaceuticals, machinery, vehicles and electrical products, which are currently subject to high tariffs. The removal of these tariffs would boost European exports in these areas. Nor have the Mercosur countries coordinated their trade policies vis-à-vis third countries. In 2011, Brazil unilaterally imposed anti-dumping restrictions on steel imports from China.
“Politically negotiated exceptions to the bloc`s rules have become the norm,” The Economist wrote. In Brazil alone, there are a hundred exceptions to separate customs codes from Mercosur`s common external tariffs, and the four countries rarely challenge each other to get rid of these fallout. This has limited Mercosur`s ability to become a genuine common market or catalyst for trade liberalization, despite its noble goals. Just as often, Mercosur has affected members` ambitions to conclude free trade agreements with countries outside Latin America. The agreement came after twenty years of negotiations. Talks began in 1999, but stalled before regaining momentum in 2016.  Negotiations had failed for years due to opposition from European beef producers, especially smallholder farmers, who feared being underpriced in price by imports from Brazil, the world`s largest beef producer.  Many South American governments at that time preferred “South-South cooperation” to developing relations with Europe, while European governments also had other priorities.  The EU has concluded bilateral partnership and cooperation agreements with Argentina, Brazil, Paraguay and Uruguay. Mercosur countries no longer benefit from the Generalised System of Preferences (GSP) because of their classification as high-middle-income countries. .