Mercosur agreement

Domestic industry in favor, agriculture against

On Friday, the EU Commission finalized the trade agreement with the Mercosur states.

(Bild: AFP, stock.adobe.com, krone.at-Grafik)

The EU Commission concluded negotiations with the South American alliance Mercosur on Friday - despite ongoing concerns (see video above). Austria's National Council has been critical since 2019, while domestic industry is in favor.

As reported, EU Commission President Ursula von der Leyen announced on Friday afternoon that the controversial trade agreement had been successfully concluded. Among other things, this involves the EU granting the countries of Argentina, Brazil, Uruguay and Paraguay access to its market for agricultural products. These countries can in turn import industrial goods from the EU more easily. Customs duties are to be reduced or completely abolished on many goods. Access will also be made easier for services.

Increased cooperation is also being sought. Negotiations have been ongoing for almost a quarter of a century. Austria's National Council already committed to a veto in 2019. The text of the treaty is not yet publicly available. This must be awaited in order to be able to make a "serious assessment", said Agriculture Minister Norbert Totschnig (ÖVP).

Here you can see a graphic of trade in the previous year.

SPÖ, FPÖ, Greens critical
The ÖVP farmers' association, the SPÖ, FPÖ and the Greens, among others, have recently been critical. Environmental NGOs, the Chamber of Agriculture, the Chamber of Labor and the trade union are also against it. Critics fear, for example, that European farmers will be forced into a merciless price war in the future and that the destruction of the rainforest in South America will be fueled.

The NEOS, the Chamber of Commerce and the Federation of Austrian Industries are in favor of the agreement. Wifo Director Gabriel Felbermayr spoke of "major economic benefits" on Friday evening. Over the past five years, solutions had been negotiated to alleviate the concerns of European farmers, for example in the beef and egg sectors.

Felbermayr: "A compromise"
"The Commission has done what is possible. Every agreement is a compromise." Trade policy experts also see Mercosur as a message to future US President Donald Trump in the competition with China. The aim is to show Trump that functioning free trade agreements are better for the domestic economy in the long term than closing off markets with new tariffs and other trade barriers, they say.