The Association of Chocolate, Biscuit, and Confectionery Industries of Europe, CAOBISCO, the European sugar industry association CIUS sugar group, and the Abicab Brazilian confectionery body were among 79 organisations across industries that called for an end to the negotiations on the European Union and Mercosur trade deal.
In their joint letter to European policymakers, the 79 global companies, including CAOBISCO, CIUS sugar group and Abicab Brazilian, asked governments to advance the conclusion of the EU-Mercosur Free Trade Agreement (FTA) discussions.
As a final deal for the EU-Mercosur agreement has been reached, in principle, the European Parliament has seemingly listened and answered their calls. On December 6, 2024, the president of the European Commission, Ursula von der Leyen and heads from four Mercosur countries - Brazilian president Lula, Argentinian president Milei, Paraguayan president Peña, and Uruguayan president Lacalle Pou - confirmed they had reached a final deal for what it’s hailing is a “groundbreaking” EU-Mercosur partnership agreement.
Since the announcement of the finalised deal, there have been no further statements from CAOBISCO, CIUS sugar group and Abicab Brazilian.
Ending a 20-year negotiation
In 2023, the EU represented 16.9% of Mercosur’s total trade amount. EU’s exports to Argentina, Brazil, Paraguay and Uruguay stood at €55.7bn, while Mercosur’s exports to the EU reached €53.7bn.
“This is a win-win agreement, which will bring meaningful benefits to consumers and businesses, on both sides,” says Ursula von der Leyen, President of the European Commission. “EU-Mercosur is the biggest agreement ever, when it comes to the protection of EU food and drinks products,” von der Leyen said. The EU Commission states that the agreement will now see more than 350 EU products protected by a geographical indication.
In announcing the concluded deal, von de Leyen confirmed the safety and “untouchable” nature of European health and food standards and stipulated that Mercosur exporters must comply strictly with these standards to access the EU market. “This is the reality of an agreement that will save EU companies €4 billion worth of export duties per year,” von der Leyen added.
The European Commission says the proposed agreement would boost strategic trade and political ties between like-minded and reliable partners. It states it will support economic growth, increase competitiveness and strengthen resilience for the two markets.
The deal, which it describes as a landmark agreement, aims to secure and diversify supply chains. It aims to create new business opportunities by removing often prohibitive tariffs on EU exports to Mercosur and help SMEs export more by “cutting red tape”.
Enhancing sustainability commitment
Through the finalisation of the deal, CAOBISCO, CIUS, Abicab Brazilian and others in the letter hope it will enhance cooperation to foster sustainable development, labour rights and environmental standards across both regions.
The Commission states that the EU-Mercosur deal advances sustainability commitments by making the Paris Agreement an essential element of the two markets’ relationship.
Amid the new deal, the Commission states it will ensure trade preferences in strategic net zero industry sectors such as renewable energy technologies and low-carbon fuels. After two decades of negotiations, it also wants to secure an efficient, reliable and sustainable flow of raw materials necessary to transition to the global green economy.
The EU’s primary executive arm states that ending negotiations and reaching the deal marks a significant milestone in fighting climate change with firm, specific, measurable commitments to stop deforestation. At the end of 2025, only deforestation-free products, including cocoa and palm oil, will be allowed to enter the EU market.
Amid the latest delay in the European Union Deforestation Regulation (EUDR), there is hope it will not face any further stalls. Alongside these, the Commission states it will ensure clear and enforceable commitments to sustainable development, including labour rights, sustainable management and forest conservation.
As part of the Global Gateway, a total of €1.8 billion in EU support will support what the Commission calls the ‘fair, green and digital’ transition in Mercosur countries. To ensure compliance, the Commission notes that civil society organisations will actively oversee the agreement’s implementation, relating to environmental concerns and human rights.
A fair deal for all?
Although no further details have been given in the Commission’s statement, the EU’s executive arm says the new deal considers the interests of all Europeans, including the critically important EU farming sector and will help increase EU agri-food exports while protecting sensitive sectors.
“We are focused on fairness and mutual benefit. We have listened to the concerns of our farmers, and we acted on them. This agreement includes robust safeguards to protect your livelihoods,” added von der Leyen.
Despite the announcement, the EU-Mercosur deal has been criticised, in particular by France, farmers and sustainability-focused organisations. In December, protests were planned in response to the agreement’s details. The deal also faces a long process ahead of finalisation.
A 2024 EU study exploring the impact of ten free trade agreements (FTAs), including the EU-Mercosur deal, said the EU agri-food sector will benefit, “especially the dairy, pigmeat, processed food, and beverages sectors.” The total value of EU imports is expected to grow between €3.1 billion and €4.1 billion in 2032.
To pass and become law, the trade agreement would require approval from 15 of the 27 EU member states, representing 65% of the EU population and having a simple majority in the European Parliament.
Possibilities for the EU-Mercosur deal
Before the deal receives the tentative green light, long-standing negotiations on the EU-Mercosur agreement stalled following the pandemic. With European farmers’ unions prompting solutions to their concerns, in November 2024, 79 signatories united to help push the agreement over the line.
Together, the 79 organisations addressed the Presidents of the European Parliament, European Council, European Commission and Hungarian Presidency of the Council and shared with the Mercosur Presidency to highlight the urgency of their industry calls to settle negotiations. The letter highlights that in 2022, the EU and Mercosur traded over €159 billion in goods and services, with mutual investments between the two trading regions being close to €380 billion.
The associations also emphasise the importance of the EU-Mercosur agreement, describing how it can help combat challenges related to geopolitical instability and supply chain disruptions. “Deepening our well-established trade relations between the EU and Mercosur is critical for ensuring the resilience of our economies,” the statement says.
Keen to see the trade deal between the EU and Mercosur secured, the joint statement said that the agreement between the two markets presents a rare opportunity to bolster their relationship. Against the backdrop of struggling production environments, economic instability and climate change, the signatories state the deal offers the opportunity to support economic recovery and sustained growth.
“It enables us to advance our commitment to free, fair, and sustainable trade,” the statement says. “It will deliver market access, diversify supply chains, foster investments and help us to deepen cooperation on sustainable development in areas such as climate change, forest preservation, and social and labour rights based on elevated standards,” it adds.
The companies’ calls are based on several advantages they believe the joint letter would provide them. First, they think that removing trade barriers will enable market access and growth, ensuring a steady supply of goods and services.
Amid the dwindling production volumes the cocoa and sugar sector has experienced in recent years, for example and subsequent cost consequences for farmers and shoppers, the businesses hope the EU-Mercosur deal will provide supply chain stability. The EU Commission released a Factsheet detailing the 1.2% of sugar imports. By strengthening trade relationships, they hope to mitigate supply chain disruptions and their impact to guarantee access to essential resources.
“The EU-Mercosur agreement will support the resilience of our industries by strengthening supply chains, opening up new markets for our companies and ensuring a stable provision of inputs,” says the companies in the statement.
As a result, the business association coalition urged European decision-makers to move towards ratifying the law and positioning the EU and Mercosur for economic and sustainable growth.
