EU parliament warns of potential concentration risks in Mercosur trade deal
A letter is circulating in the European Parliament warning that the EU-Mercosur Trade Agreement may allow major South American agricultural firms to dominate quota access.
The EU-Mercosur Trade Agreement creates a free-trade area of over 700 million people, potentially altering agricultural market dynamics through quota allocation to major South American firms.
“In markets that are already highly concentrated, there is a high risk that volumes will be captured by a limited number of large industrial groups,” the letter warns.
Key developments
A letter in the European Parliament warns of potential market concentration stemming from the EU-Mercosur Trade Agreement’s quota system. It highlights risks posed by large South American agricultural firms.
This correspondence, initiated by Belgian MEP Benoît Cassart, expresses concern that Mercosur’s top exporters, particularly from Brazil, may dominate quota allocation, escalating competition for European farmers.
Mercosur: MEPs letter warns of concentration risk due to quota allocation system
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A letter is circulating in the European Parliament warning of the concentration that might result from the system of quotas allocation contained in the EU-Mercosur Trade Agreement and the potential for major South American agricultural firms to abuse it.
The document, sent to EU Agriculture Commissioner Christophe Hansen and Climate Commissioner Wopke Hoekstra, comes as the agreement is set to enter provisional force in a week (1 May), despite warnings from European farmers over unfair competition from Latin American imports.
“In markets that are already highly concentrated, particularly in Brazil, there is a high risk that volumes will be captured by a limited number of large industrial groups with the financial and administrative capacity to access quotas and operate through subsidiaries located in Europe,” the letter reads.
The agreement, signed mid-January between the EU and Mercosur countries — Brazil, Argentina, Paraguay and Uruguay —, cuts tariffs on both sides of the Atlantic, creating a free-trade area of more than 700 million people.
Negotiated over 25 years, it includes tariff-rate quotas for sensitive products such as beef and poultry. 99,000 tonnes of beef per year will be allowed into the EU at 7.5% tariffs, and 180,000 tonnes of poultry at 0%, with both phased in over five to six years.
But these limits have failed to quell opposition in Europe. On 21 January, the European Parliament moved to refer the agreement to the Court of Justice of the European Union to assess its legality.
Quota system managed by Latin American countries
The letter, initiated by Belgian liberal MEP Benoît Cassart, himself a farmer, flags the risk that Mercosur’s agricultural heavyweights could dominate access to quotas, as the agreement allows Latin American countries to manage their allocation. It also points to a Commission regulation adopted earlier this week in Brussels implementing that provision.
“Reduced-duty quotas allow certain large exporters to enter the European market more easily and secure outlets,” it said. “Once these commercial relationships are established, they can then increase their volumes by exporting beyond quotas, this time at full duties, but still to the same buyers.
“Quotas serve as a strategic entry point, enabling exporters to expand their presence and consolidate their position on the European market.”
The letter will circulate among MEPs until 30 April.
Cassart’s office told EU News the concerns focus in particular on Brazil, where quotas are allocated based on past export performance or financial and technical criteria that favour already well-established players.
Brazilian meat giant JBS, heavily subsidised by Brasília, is among those singled out.
The letter calls on the Commission to exclude beef and poultry from the quota management system granted to Mercosur countries, so that control remains “fully and exclusively” in EU hands.
Failing that, it urges the introduction of a review clause allowing reassessment based on indicators such as volume concentration and the number of operators benefiting from the quotas.