The EU-Mercosur agreement: why is it a key opportunity for Argentine beef?

After more than two decades of negotiations, the agreement between the European Union and Mercosur has finally been greenlit and is ready for final signature. Despite internal disagreements and points requiring careful analysis, this is a historic agreement aimed at boosting bilateral trade and strengthening diplomatic relations between the two blocs in an international context characterized by uncertainty and trade fragility.

Broadly speaking, the agreement provides for the elimination of tariffs on over 90% of trade between the European Union and Mercosur. While Europe will primarily benefit from automobile and machinery exports, South American countries will gain greater access for their agricultural products to the demanding European market.

This clause, in particular, has generated the most resistance within the European Union. The European agricultural sector, with the active support of the French government, has expressed concerns about potential competition from South American products produced under regulations considered less stringent. As a result of these disagreements, the agreement includes safeguards that will allow the EU to apply stricter controls to prevent distortions in its internal market.

In the agricultural EXPORT sector, beef stands out as one of the products that will benefit the most. Firstly, the tariff abolition will directly impact the current Hilton quota, which is currently subject to a 20% duty on imports into the European Union.

Furthermore, the agreement establishes a new annual quota for Mercosur of 99,000 tonnes on a carcass weight basis, or approximately 76,000 tonnes on a product weight basis. This quota will be implemented gradually over five years and will be subject to an in-quota tariff of 7.5%, significantly lower than the out-of-quota tariff of nearly 50%.

This volume will be added to the existing quotas—the Hilton Quota and 481—albeit with different conditions. Unlike those systems, the new quota will not require a specific type of livestock feed, but it will impose restrictions on product presentation: up to 55% can be imported as chilled MEAT, and the remainder must be sold frozen.

One of the unresolved issues is the internal distribution of quotas among Mercosur countries. Brazil, Argentina, Uruguay, and Paraguay must agree on their distribution, and this decision could become a new stumbling block before the agreement actually comes into force.