Mercosur deal will benefit EU agriculture

The European Commission has presented a long-awaited assessment of the impact of the free trade agreement with the MERCOSUR countries. The DG Trade published on its website an assessment of the impact of the deal by the London School of Economics (LSE). The directorate emphasized that the agrarian economy of the Union would benefit from a free trade agreement.

The report is mainly based on conservative and ambitious scenario modeling; for sectoral analysis, a different method is used. According to the impact assessment, under conservative conditions, gross domestic product (GDP) will grow by another 10.9 billion euros or 0.1 percent in the EU and 7.4 billion euros or 0.3 percent in MERCOSUR by 2032 if the agreement is implemented. The ambitious scenario projects GDP growth of 15 billion euros for EU member states and 11.4 billion euros for South American countries over the same period.

Annual imports of beef may increase

it is expected that the total EXPORT of agricultural products from the EU will grow by 0.4 and 0.6 percent, respectively, while imports from other countries - by 0.9 and 1.1 percent. However, the supply of beef from MERCOSUR will grow significantly more, by 30 or even 64 percent; at the same time, EU production will fall by 0.7 or 1.2 percent. According to the impact assessment, European exports of dairy products will benefit significantly due to the reduction of high import tariffs of MERCOSUR countries.

According to the impact assessment, annual imports of beef from MERCOSUR to the EU could increase by around 60,000 tons and 128,000 tons, depending on the implementation of one or another scenario. In this context, it is pointed out that the export product usually tends to be at the upper end of the quality range and therefore the impact will also be focused on these market segments. According to the LSE, it is "likely" that beef imports will end up growing less than expected and that the changes will benefit mainly products that are currently imported at full duty. The social impact of the agreement, according to the SIA, includes a reduction in employment in the European beef sector by 0.7 and 1.3 percent, respectively.