What changed in Mercosur deal between 2019 and 2024

The Mercosur trade deal announced by European Commission president Ursula von der Leyen in Uruguay last week is virtually the same deal as agreed in 2019.

The core agreement announced then more or less remains intact, but there are changes made to reflect EU environmental and sustainability concerns.

These threatened to derail the 2019 agreement if it had been presented for ratification because the Commission that was appointed in late 2019 adopted a strong environmental policy in its Green Deal strategy that included a Farm to Fork agricultural policy that greatly constrained farmers' production capability.

The EU environmental lobby and increased number of Green Party MEPs in the European Parliament following the 2019 elections were also outraged by increased rainforest clearance in Brazil under the presidency of Jair Bolsonaro.

With farmer and environmental opposition combined, the road to ratification looked impossible and the Commission sought to strengthen the environmental aspect of the agreement, which has been in negotiation up to the deal announced last week.

Environmental changes

The 2024 deal includes a number of amendments to address EU concerns around the environment.

Adoption of the Paris Agreement on climate change is now a core requirement for participation in the deal.

Withdrawal from the Paris agreement or if by actions a party undermines the agreement, then the agreement is suspended. This brings the Mercosur deal into line with the EU-New Zealand agreement and the EU-UK post-Brexit agreement.

An annex has been added to the trade and sustainable development (TSD) chapter that includes enhanced commitments on deforestation, which include taking measures to stop further deforestation from 2030.

There is also a co-operation commitment to support Mercosur countries in the facilitation of implementing the EU deforestation regulation. Reference is also made to sustainable supply chains and promotion of trade in sustainable products.

Tariff changes

This is the area that matters most to Irish farmers, but the only change is that Paraguay has been granted an additional 1,500 tonne pork quota and an additional 50,000 tonnes of biodiesel.

Otherwise, the big changes are for the automobile sector, with access for electric cars from the EU to South America enhanced with a day-one reduction in tariff from 35% to 25%, with full liberalisation after 15 years.

There are also some minor adjustments on car safeguards and export duties on raw materials and industrial goods - the best-known example has been Argentina’s tendency to impose duties on beef exports in order to keep prices lower for domestic consumption.

Procurement and intellectual property

The 2024 deal also has some further relaxation in government procurement rules for companies in both the EU and Mercosur countries.

Negotiations on EU geographical indicators were concluded in 2023 and this will give enhanced protection to EU PGIs and PDOs.

A review clause is also included - the first one to take place three years after the agreement enters into force.

These examples highlighted by the EU reflect the fact that the 2024 version of the Mercosur deal is essentially the same as was agreed in 2019 on the substantial issues.

A “renegotiation” was forced when it became clear that the EU tightened the rules for EU farmers in 2020 on one hand while opening the door to South American competition with the other.

Rarely have farmer and environmentalist interests aligned, but they did so on this issue. The initial responses by both the environmental NGOs and farm organisations suggests that they remain unpersuaded by the updated deal.