August 13, 2020

Spain, before the EU-Mercosur agreement: jubilation in the car factories, concern in the field | Economy

Immaculate Sanfeliu prefers not to make false illusions. She is convinced that the trade agreement between the EU and Mercosur It will open a good gap in the fruit sector it represents. And the worst of all is that it will not be the first. "We live very complicated times. We are accumulating grievances. And now, this pact will mean that in the EU, our natural market, we have to compete with Brazilian juices, which will be progressively discharged from the current 12% tariff, "protests the general director of the Citrus Management Committee, association that brings together a sector that exports oranges, tangerines and lemons worth 3,200 million euros. Is there room for maneuver to limit the damage? "The signed, signed is. The agreement will reduce our export windows. We only have the right to kick", Answers on the other side of the phone.

It is difficult to find a greater contrast in the tone of the conversation with Arancha Mur. The head of Anfac, the employers' association of car manufacturers, proudly shows their joy at the prospect of gaining access to four countries that bring together 260 million souls. It is also an area that has been very protected so far, which imposed the importation of vehicles with a tariff of 35%, and to which it was exported in a rather limited manner.

Spain, before the EU-Mercosur agreement: jubilation in the car factories, concern in the field

Spain sells to Argentine, Brazilian, Uruguayan and Paraguayan every year about 15,000 vehicles, half that to Mexico or the US; and a fifth part to Turkey. Although the process is going to be long, Mur is confident in quintupling exports to this area in the medium term. And he admits that when talking about winners and losers, his sector clearly stands out among the first. "The automotive world pioneered from the beginning to push this agreement. We are very happy, "he admits.

The European embrace of Mercosur is celebrated especially by manufacturers of industrial goods, automobiles, machinery, textiles and footwear: almost 10,000 Spanish companies, which employ 40,000 people, trade with this block. And regrets farmers, ranchers and ecologists. "Our sector is clearly touched," says Ignacio López, of the Asaja agrarian association, which points out the producers of fruits and vegetables, those of beef and poultry, sugar, ethanol, rice and honey as the great victims. They are the two sides of a very complex agreement, of which all the fringes are not yet known or when it will come into force in its entirety.

The European Commission announced last June 28 that, after more than 20 years of intermittent negotiations, it had finally closed a political agreement to strengthen the ties between the two areas, which in 2018 yielded a commercial balance of 2,857 million of euros favorable to Mercosur. It is not just an impressive tariff reduction that over the next decade will end taxes of 91% of the goods that the EU exports to Mercosur. It will also open markets to construction companies that want to submit to public tenders, will match food quality standards and establish environmental requirements on both sides of the Atlantic.

For its entry into force, a long period now begins, which will conclude with the ratification of the text by the European Parliament, probably by the end of 2020. But the commercial one is only one of the three legs of the broader Association Agreement, which will also include dialogue political and cooperation, which will affect, among others, the immigration, digital economy and human rights norms. For the entry into force of these two pillars will require the parliamentary ratification of all States.

But why is an alliance that had begun to be forged at the end of the last century just now culminated? "It coincides that, for the first time in all this time, the agreement interested both Mercosur and the EU. Until now, neither France nor Ireland were willing to liberalize the agricultural sector before giants like Brazil or Argentina, "replies José Luis Kaiser, general director of Trade Policy. At economic factors the geopolitical vector also joins. The protectionist escalation starred by the US of Donald Trump, as well as his threat of blockade to the WTO, has propitiated the European acceleration in the negotiation of its own commercial agreements. In addition to Mercosur, there are also agreements with Canada, Japan, Vietnam, Singapore …

Spain, before the EU-Mercosur agreement: jubilation in the car factories, concern in the field

But this agreement is different. It is the first that offers an evident complementarity between a block, Mercosur, strong in primary products, and the other, European, which stands out in services and manufactured goods. "The agreement is much more positive for Europe than for Latin America. It is difficult to know how much, but it will slightly boost the growth of the Spanish economy, "says Federico Steinberg, of the Elcano Royal Institute. "It's not like I'm going to take you out of poverty, but something will help," he laughs.

One of the most controversial aspects of the pact promoted by the European Commissioner Cecilia Malmström is its environmental impact. Its defenders wield the importance of having tied their destiny to the Paris Agreement on climate change. Especially because it forces the Brazilian president, Jair Bolsonaro, to forget his flirtations with the idea of ​​emulating Donald Trump, who in 2017 it abandoned the pact signed by 195 countries.

But the environmental groups are not reassured by this idea. They consider that the EU-Mercosur pact will contribute to deforestation of the Amazon by the massive passage from jungle lands to pasture for cattle or soybean plantation. "Livestock is the biggest driver of deforestation. As with other agreements, economic globalization prevails over everything, and multilateralism in matters of human rights or the environment is relegated to the background ", says Miguel Ángel Soto, responsible for Trade of Greenpeace.

Kaiser denies the major: "All the principles of the EU are included in the agreement", answers the high ministerial position.

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