EU member states have backed a regulation introducing a so-called safeguard clause to the agreement with Mercosur, aimed at protecting European agriculture from an excessive influx of cheaper products from South America. This means the clause will already be in force when the European Commission provisionally launches the agreement.
The regulation will enter into force 20 days after its publication in the Official Journal of the European Union. This means the safeguard clause will be effective when the Mercosur agreement begins to apply provisionally. This is expected to happen two months after the exchange of formal notes between the European Commission and the Mercosur countries.
On February 27, Ursula von der Leyen, President of the European Commission, announced that until the agreement is fully ratified by the European Parliament, its trade section will be applied on a provisional basis. EU treaties give the Commission such a possibility.
The safeguard clause introduces additional mechanisms intended to protect EU agriculture from an influx of agricultural products from Mercosur countries – Argentina, Brazil, Paraguay and Uruguay.
The trade agreement will allow products such as beef, poultry, dairy products, sugar and ethanol fuel to be imported into the EU under more favorable tariff rates for South American producers; however, these reductions will apply only to specific quantities of each product defined in the agreement. In return, Mercosur countries will reduce tariffs – often considered prohibitive – on European industrial goods, including automobiles.
The safeguard clause in the agreement is meant to address the concerns of farmers, who fear an excessive influx of products from Mercosur. It will be triggered if the price of a given product in the EU falls by 5 percent as a result of imports from Mercosur. In such a case, it will be possible to increase tariffs on that product or even ban its import into the EU.
The European Parliament had earlier referred the Mercosur agreement to the Court of Justice of the European Union, which resulted in the ratification process of the agreement being blocked in the chamber.
The provisional application of the agreement means that the provisions related to trade – which fall under the competence of the European Commission – begin to apply before the agreement completes the full ratification procedure and formally enters into force. In practice, this means the immediate removal of tariffs and trade barriers. Other issues, such as investment protection, will have to wait until full ratification.
At the beginning of January, a majority of EU countries agreed to sign the agreement. It was opposed by Poland, France, Austria, Ireland and Hungary. The agreement was approved despite mass protests by farmers in many EU countries.