In the coming days, barring any unforeseen circumstances, the trade agreement between Mercosur and the European Union should be signed. This agreement represents a significant opportunity for the member countries of the South American economic bloc, but it also reflects the frictions faced by European countries due to their own internal problems and the geopolitical challenges at this rather turbulent time in history.
The evidence of lower production costs in South America is raising concerns among various European industries. While the European perspective highlights cheap labor and lower tax and administrative burdens as threats, it is also true that South American countries have the potential to develop larger production scales. Until a few years ago, fears of an influx of products were addressed indirectly through the criticized European regulations related to environmental and health aspects. But this only addresses part of the problem, overlooking, as in the French case, structural issues (the perception that the agricultural sector, or more precisely, the French agricultural model, is strategic) and cultural ones (the agreement mobilizes other dichotomies such as globalization versus productive sovereignty or large exporters versus local rural economies, issues that have not yet been resolved within the European context).
For now, and returning to the French case, supermarkets have expressed clear opposition to the agreement, stating that they will not offer beef and poultry from the South American bloc on their shelves due to unfair competition resulting from a structural asymmetry that would force them to lower their domestic prices, affecting the profitability of small and medium-sized producers. This situation illustrates, as mentioned earlier, the multiple political tensions and the virtual confrontation with what they perceive as a measure dictated “from Brussels.”
In reality, this agreement has been under negotiation for over 25 years, subject to constant advances and setbacks, and influenced by the political climate of all participating countries. It seems that in recent years a favorable situation has emerged that could lead to the agreement’s approval and signing, although tensions remain. “South American beef” could cause concern not only among Europeans: a few weeks ago, China imposed an additional 55% tariff on beef imports from Brazil, Argentina, and Uruguay. Shipments from South America are putting pressure on the competitiveness of their local industries.
The United States has also limited quotas for beef exports (in the case of Argentina, the policy of understanding between Milei and Trump helped to ease restrictions, as did the lower fat content of Argentine beef). This is a historic moment that warrants a perspective beyond national borders. An understanding of global geopolitics is urgently needed to understand the challenges that Latin American exporters and the countries themselves must face in developing their trade promotion policies.
