Sugaronline Editorial - Tik tok…tik tok… By Meghan Sapp

Published: 11/24/2017, 12:57:00 AM

Time is quickly running out for Mercosur and the EU to come to a deal on free trade that will likely come at a heavy price for European agriculture.



Time is quickly running out for Mercosur and the EU to come to a deal on free trade that will likely come at a heavy price for European agriculture.

 


With just over a fortnight to go, time is quickly running out for the European Union and Mercosur to come to a trade deal after decades of stops and starts and a self-imposed deadline for the end of the year. With much of the world’s sugar industry in London next week for the annual International Sugar Organisation seminar, talk will no doubt be on Brussels where the final round of negotiations will take place beginning December 4.

In its penultimate negotiation round two weeks ago in Brasilia, Mercosur said it was willing to open its markets completely to European cosmetics, automobiles and chemicals if only they could get a better deal on beef and ethanol, the latter of which is currently on the table at 600,000 metric tonnes per year. The offer in 2004 was for 1 million tonnes of ethanol, so Mercosur wants no less than that.

Back in September, Brazil said it was willing to leave aside its ambitions for increased sugar market access in exchange for beef and ethanol, a move that put the EU ethanol industry on notice but has done nothing to quiet the nerves of the sugar industry. Even with sugar allegedly off the table, beet producers and their allies are lobbying hard to make sure it stays that way. Not surprisingly, refiners and sugar users want a TRQ from Brazil, or Mercosur in general, to balance the sugar supplies post-quotas that will see further geographical concentration of sugar production by just seven companies EU-wide.

Both sides hope that the agreement can be finalised and signed during the upcoming WTO meeting in Buenos Aires December 10-13, but a lot is getting in the way. On the European side, basically France and Ireland are keeping negotiators on task to protect the agri sector while the Latin American industrial sector is trying to keep its own doors closed. But they’re failing. They’re likely to take a hit for the good of the deal, but whether the European Commission is prepared to do the same and make a sacrificial lamb of the European agri sector remains to be seen.

With Mercosur offering to open up its markets completely to duty-free trade with Europe over 10 years, it wants a sweet agri offer to compensate for the hit its industrial sector is likely to suffer. Brussels may have no choice but to concede if it wants to get this deal done once and for all. Both sides understand that if the deal isn’t signed by the end of the year, it won’t likely get done at all, and that’s a result neither of them want.

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