EU- MERCOSUR: Macri to make it happen?

If anyone would ask a few months ago whether the EU-MERCOSUR negotiations could be revitalized the answer would likely be: ” as much as the Doha Round”. It would have been hard to find an optimistic voice, for the trade talks seemed to be there hibernating for good.
There were however signs from Brazil that there was renewed interest in the deal, the only one sizeable deal open to Brazil. But with Argentina a very much protected and inward looking economy the prospects of revitalized talks were at most distant.

His agenda includes promoting trade, scrapping export taxes, making Mercosur an effective trade bloc again.

The election of a trade liberal President in Argentina changed everything. Macri is only the third non-Peronist President in the history of the country. His agenda includes promoting trade, scrapping export taxes, making Mercosur an effective trade bloc again. His political agenda may well mark a turning point in South America, away from ” bolivarianism” and left leaning Governments and towards more liberal/social policies.
With Macri in power the main obstacle in Mercosur to a trade agreement with the  EU vanishes. Uruguay has always been favourable. Paraguay will likely follow. Venezuela is out of the game (and if Macri is heard in Brasília and elections are rigged de facto out of Mercosur as well).
Brazil is now more amenable to negotiating than in the past decade. Brazil’s economy is in dire straits, in need of new markets to make good of the dramatic fall of the currency. The Ministers for Industry and Trade, and for Agriculture are very much in favour. Brazil will not seek to participate in an enlarged TPP due to its large rules and standard settings, leaving the EU as the sole realistic  option.

What was unlikely a couple of months ago becomes now a distinct possibility.

Does this all mean that EU Agriculture will now face TTIP and Mercosur at the same time (and if the Commission has its way also Australia and New Zealand)?
What was unlikely a couple of months ago becomes now a distinct possibility.
There are still unknowns. Macri does not enjoy a majority in both Chambers of Congress. He needs to push against likely fierce political resistance, and face tremendous economic problems left by decades of Peronist rule.
In Brazil, the President is in the weakest position a President ever had since the end of military rule. Will her Government survive? Will she fall?
The other unknown is how will the EU react. It would be difficult for the EU not to move ahead with a negotiation that started in the previous century and is stalled since 2004, if the other side is finally committed.

As for TTIP the vulnerable sectors are the meat sectors, beef in particular, and ethanol. The added difficulty will be sugar.

The EU is trying to push Mercosur to up its offer from 87 to 90% tariff coverage. It is not as yet clear whether offers will be exchanged still this year. But in the end if both Argentina and Brazil at the highest level want to move it will be very difficult to procrastinate, in particular as the Commission wishes to move also with Australia and New Zealand.
And what should the EU Agriculture sector do if negotiations speed ahead? As for TTIP the vulnerable sectors are the meat sectors, beef in particular, and ethanol. The added difficulty will be sugar, as Brazil is a very competitive and large producer.
But Mercosur has its own fragilities: wine in Brazil, dairy in Brazil and Argentina, olive oil in Argentina, processed products in both countries (from pasta to chocolate).
So the EU sector should expect more opening but not complete free trade in its sensitive sectors. To this one should add the fact that the level of ambition of the deal will be lower than for TTIP, as shown by the current debate on the tariff coverage of the offers. Which means probably lower quotas on sensitive products than in TTIP.
That being said, the inescapable fact is that the EU sector will face an even bigger challenge in the years ahead.
That gives added urgency to what Farm Europe has sustained: the CAP needs a forward looking review, and particular exposed sectors as beef need a comprehensive package of measures covering the whole chain. Farm Europe will not shy from advancing its proposals on how to meet these challenges.