Exports of agricultural and related products from the United States to the EU averaged $15.4 billion per year from 2015 to 2019. It is estimated that $4 billion of these annual exports are in direct competition with similar MERCOSUR products and are therefore particularly vulnerable. Similarly, the preferential status for EU products in MERCOSUR will affect the competitiveness of US exports of intermediate and processed consumer goods to these South American countries. The EU`s success in securing a commitment to protect geographical indications and the wording of the “precautionary principle” in the agreement will continue to serve as a model for future EU trade negotiations and could be a barrier to US exports. The agreement will remove 93% of tariffs on MERCOSUR exports to the EU, while preferential treatment will be offered to the remaining 7%. Similarly, the agreement removes tariffs or creates tariff quotas for the EU`s main agricultural exports to MERCOSUR. In addition, the agreement provides for the protection of more than 350 geographical indications (GIs), recognises the principle of regionalisation and adopts language on EU food safety and health standards, including the “precautionary principle”. Although a definitive tariff has not yet been published, a preliminary analysis based on alleged tariff reductions and tariff quotas shows that US agricultural products competing with MERCOSUR and EU products will be at a significant disadvantage. The impact of the agreement on U.S. agricultural exports to MERCOSUR will be diversified and product-specific.
The table above highlights important product categories with overlapping competitive interests and risk. Ethanol From 2015 to 2019, MERCOSUR had only an average market share of 7% in ethanol exports to the EU, but received major concessions in the new agreement. Mercosur received a quota tax of one third of the most-favoured-nation (MFN) rate on 450,000 tonnes (570 million litres) of ethanol for chemical purposes and 200,000 tonnes (253 million litres) of ethanol for all uses, including fuels. In comparison, the EU imported a total of 966,000 tonnes of ethanol worldwide in 2019. In addition, according to the same EU factsheet, the agreement contains language on the “precautionary principle” and “the right of the parties to take or maintain precautionary measures to protect human, animal and plant health, even in cases where the relevant scientific evidence is insufficient”. The wording on geographical indications and the “precautionary principle” can serve as a model for the EU`s ongoing negotiations with countries and trade groups such as China, ASEAN, Chile, Canada, Australia and New Zealand. On 28 June 2019, the European Union became the first major partner to conclude a trade agreement with the countries of the Southern Common Market (Mercosur), Argentina, Brazil, Paraguay and Uruguay. This historic agreement, which the European Parliament and the Commission have not yet ratified, covers a market of 780 million people and covers 25% of global GDP, making it one of the largest free trade areas in the world. Article 25 of Chapter IV `Institutional provisions` establishes a Joint Committee responsible for the management and implementation of the Agreement. August 2, 2010, during the 39. As a summit of the Heads of State or Government of MERCOSUR and associated States, MERCOSUR signs a free trade agreement with Egypt. The Mercosur-Egypt Free Trade Agreement entered into force on 1 September 2017 after all parties completed their internal ratification procedures for the agreement.
The EU has a high preferential tax rate outside the quota on beef and beef products of around 60%. Under the agreement, the EU will bring 99,000 tonnes of beef (55% high-quality fresh beef and 45% frozen beef) to its market with a 7.5% tariff and remove the quota rate for the World Trade Organisation`s Hilton quota. (For more information, see the FAS report Comparing EU tariff rate quotas for high-quality beef.) Under the Hilton quota, the EU imports up to 66,826 tonnes of high-quality beef at a 20% tariff rate from certain suppliers, each with a specific allocation and product requirements. The Hilton quota offers Canada, the United States, Australia, New Zealand and Mercosur countries specific quotas of 20%, compared to 45-60% for other categories of high-quality beef products. Canada recently gained duty-free access to the Hilton quota as a result of its trade agreement with the EU. In short, due to the complexity of the EU tariff quotas and the different products offered by the US and MERCOSUR, it is unlikely that the US market share for beef exports will be significantly affected by the EU-MERCOSUR trade agreement. Overlapping eu-US dairy exports include lactalbumin, dry and solid lactose and lactose syrup, milk and cream concentrate and infant formula. Cheese accounts for almost a third of EU milk exports to MERCOSUR.
The gi protection in this agreement will consolidate the EU`s advantage in cheese exports. Agricultural products from the US and the EU already account for a significant share of Mercosur`s imports, but most products do not overlap. From 2015 to 2019, nearly 60% of US exports to MERCOSUR were soybeans and ethanol, which the EU does not export in significant quantities. During the same period, the EU exported a variety of high-quality products, including olive oil, food preparations, wine and distilled spirits. The agreement will reduce potential export opportunities for intermediate and processed consumer goods from the United States to MERCOSUR. Although it is not within the scope of this report to assess the impact of the protection of GIs in the trade agreement and the wording using the “precautionary principle”, these provisions represent a great gain for the EU in the area of global standards, especially since the US generally considers mercosur countries to be like-minded with regard to the importance of science as a basis for trade issues and Regulatory. According to the EU factsheet “Best Export Opportunities for European Farmers and Food Producers”, the agreement protects 350 European geographical indications and “represents the largest agreement ever reached under a trade agreement on geographical indications”. Ratification of the agreement by the European Commission and the European Parliament is uncertain given the overwhelming environmental concerns. In an unprecedented move, the European Parliament symbolically rejected the deal in October due to concerns about the environmental policies of the current Brazilian government. Because of these concerns, if Brazil is ratified and Brazil gains better market access, it could face future sanctions for any measures affecting the environmental services of its rainforest and other ecosystems. In January 2004, MERCOSUR received a proposal from Egypt to negotiate a free trade agreement on the basis of discussions held at the G-20 meeting in November 2003. At the XXVI ordinary session of the Mercosur Joint Market Council, a framework agreement was signed between MERCOSUR (composed of Argentina, Brazil, Paraguay and Uruguay) and the Arab Republic of Egypt.
MERCOSUR took it up in the form of Council Decision 16/04 on the common market. This agreement provides for the negotiation of a free trade agreement with a first phase, consisting of the negotiation of an agreement of fixed preferences. First, there is a growing global concern about climate change and the crucial role Brazil`s rainforest plays as the planet`s largest carbon sink, but biodiversity is another area of concern. These sanctions could include the sale of Brazilian assets in investment portfolios as fund managers in Europe and elsewhere seek to meet growing investor demands for improved environmental responsibility and sustainability, reduced foreign direct investment in the Brazilian economy and increased trade barriers. In addition, EU farmers who are concerned about increased competition could be deterred from being allowed. In particular, EU producers are concerned about the concessions on ethanol and beef granted to Mercosur countries. 253.4 million litres for all uses at the in-quota rate 1/3 Most-favoured-nation rate The “other intermediates” product group includes enzymes, peptones, vegetable juices, wheat gluten, hops and a few others. Although there is significant overlap within the product group between EU and US exports to MERCOSUR, the products are more specialised and can therefore be more difficult to replace. There is also an overlap for products in the food preparation category, which includes bread, pastries, cakes and pasta. Exports of processed vegetables from the US and the EU overlap to some extent with products such as French fries and tomatoes.
The extent to which these products are unique will determine the extent to which US exports are threatened due to lower tariffs on the EU. Montevideo, Uruguay: Second Round of | negotiations Appendix 3: Agreed Terms for Market Share and Global Sales Negotiations The information is provided by Trade Data Monitor, LLC or the United States. . . .