The Council of the European Union has authorized the signing and provisional application of the Interim Trade Agreement (ITA) with the Mercosur countries, allowing the European Commission to initiate the implementation of the free trade treaty without waiting for the ruling of the Court of Justice of the EU (CJEU). The decision comes after Uruguay and Argentina completed their respective ratification processes in recent hours, becoming the first countries in the South American bloc to greenlight the agreement.
The President of the European Commission, Ursula von der Leyen, announced this Friday that she would proceed with the provisional application of the pact. "When they are ready, we will be ready," she stated at a press conference without questions at the institution's headquarters in Brussels, where she indicated that during the past weeks she had held intense discussions with the Member States and with the MEPs on this issue. According to the Council's decision, the ITA will be applied provisionally from the first day of the second month following the date on which the signatory States of Mercosur notify the Union of the completion of their internal procedures and confirm their willingness to apply it provisionally. A community spokesman specified that the processing will take approximately two months.
The activation of the agreement means, after nearly 26 years of negotiations, the creation of one of the largest free trade zones in the world, with a market of 720 million consumers. The treaty provides for the gradual elimination of tariffs for 91% of EU exports to Mercosur and 92% of Mercosur sales to the EU. Von der Leyen ensured that the pact "opens countless opportunities, reduces billions in tariffs, and allows our small and medium-sized enterprises to access markets and scales that they could only dream of before."
The agreement, however, faces strong opposition from producers in the European primary sector, especially from Andalusia, as they believe it will facilitate uncontrolled entry of products like beef and poultry, rice, citrus fruits, dairy, or honey. These foods will have a maximum tariff-free entry quota, but agricultural organizations estimate that without a single European supervisory authority, adequate oversight cannot be guaranteed. For other products, like table olives, a gradual elimination of the tariff is contemplated for a producer like Argentina while it remains for Spain.
Spain has shown support for the agreement due to the opportunities it represents for Spanish companies, given the cultural closeness with the Mercosur countries. Even in the agricultural sector, the Government believes that there are more opportunities than threats, especially for olive oil and wine, which is opened to a market of 270 million consumers. However, olive oil producers remain wary of the possibility that countries with large land areas could cultivate thousands of olive trees and compete under better labor conditions and with fewer environmental restrictions.
On January 21, the European Parliament decided, with 334 votes in favor and 324 against, to elevate the agreement to the CJEU for it to assess its compatibility with community treaties, which effectively paralyzed the final ratification. However, the European Commission has chosen not to wait for that ruling to begin the provisional application, among other reasons because the Eurochamber itself recently approved safeguard clauses for agriculture, which allow the pausing of imports in cases where damage in the European sector is detected due to price drops or an increase in sensitive product imports from the Southern Cone beyond the stipulated quotas.
The definitive entry into force of the entire set of agreements requires a more complex process, which involves adoption by the parliaments of the Twenty-Seven and the consent of the European Parliament, which can approve or reject it, but can no longer modify it. The European Union and the Mercosur countries signed the political and free trade agreements on January 17, with which both regions concluded the negotiations. In that vote, 21 Member States voted in favor of creating the free trade area, opposed by France, Hungary, Poland, and Austria.
Following the ratification by Uruguay and Argentina, Von der Leyen expressed hope that Brazil and Paraguay would soon follow the same path. The German conservative recalled that since the signing of the pact, she made it clear that the Union would be ready when the Mercosur countries were. From the ratifications on the other side of the Atlantic, the Commission will exchange with the South American countries the so-called "notes verbals" to notify the willingness for the commercial pact to come into force temporarily, at which point the two-month countdown begins.