The European Union is in the midst of concluding a free trade deal with Mercosur, the trade bloc also known as the South American Common Market. Its members are Argentina, Brazil, Paraguay, Uruguay, and Venezuela (which has been suspended since December 2016). Current associate countries are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname. Mercosur governs the tariff policies between the member states and regulates commonly accepted rules on free trade zones (FTZ). Its ambition is to strike agreements with other trading blocs around the world, of which the European Union is one.
Consumers on both sides have much to gain. Eliminating tariffs and quotas would ease the free flow of goods, establishing competition for both marketplaces. The result: better prices and more choices for European and South American consumers.
But according to French President Emmanuel Macron, agricultural products coming out of the Americas are a threat. In talks with the United States, he said that the free trade of these products has no place in the negotiations. The red line: nothing can enter the market if it doesn’t respect EU environmental, health, and social standards. Conveniently, all of these standards are much higher in the European Union than they are in the U.S. Yet that’s really just an excuse: Macron is leaning towards protectionism. In his speech can be found the sentence “we need to protect farmers and consumers”: you’ll note that the word “farmers” is mentioned first.
Yet when it comes to the Mercosur talks, the young “centrist” is taking a different approach. In 2015, the Paris Climate Accord was signed under the lead of then-French president François Hollande. Back then, Macron was part of Hollande’s government as a controversial and impulsive minister of the economy. When President Trump pulled out of the agreement at the beginning of his term, Macron was worried that the deal, which apparently represents France’s ambition to save the world, would crumble. This risk became even more credible after Jair Bolsonaro won the Brazilian presidential election, as he had also warned that he would pull out of the agreement.
In November, Macron told reporters at the G20 summit that he wouldn’t sign an agreement with Mercosur (of which Brazil is a member) if Bolsonaro were to take his country out of the Paris accord. Brazil’s environment minister then said he would review the agreement, but so far no decision has been made. At the G20, Macron said: “I cannot ask French farmers and workers to change their production habits to lead the ecological transition, only to sign trade agreements with countries that do not do the same.”
But it isn’t about production habits; it’s more about production in itself. According to Reuters, the quota of meat imports from South America to Europe would increase from an initial offer of 70,000 tons to 99,000 tons. Farmers felt betrayed by Paris, and cried foul at the unfair competition, as they saw it. Which is why on June 17, Poland, Belgium, and Ireland, led by France, signed a letter to the European Commission arguing against any increases to current quotas on beef, poultry, pork, sugar, and ethanol.
They also write: “In addition, due to the vulnerability of those sectors, we would seek reassurances in order to strictly monitor and mitigate the possible negative impact on the agricultural sectors, through e.g. an ad hoc safeguard mechanism.”
Safeguard mechanisms in the European Union mean that the European Commission in Brussels can, at any time, reimpose tariffs if it feels that its farmers have been disadvantaged by free trade. Not too long ago, the EU did just that to rice coming from Myanmar and Cambodia.
In a response on Friday, six other EU countries, led by German Chancellor Angela Merkel, responded with a letter of their own. “We are at a crossroads,” they said. “The European Union cannot afford to give way to populist and protectionist arguments about trade policy, an area in which the achievements of the European Union are undeniable.” They urged the European Commission to finalize its trade deal this week. Depending on how the talks proceed, there could be a conclusion by Wednesday or Thursday.
Macron, a leader from a country that prides itself on its agricultural production and where farmers are an influential voting bloc, is now arguing for protectionism and the ability to impose tariffs on impulse. In that, he sounds an awful lot like Donald Trump. Yet for some inexplicable reason, Macron is also leading the charge against Trump’s protectionism.
Here’s the bottom line: there isn’t a single trade war that was started by the Trump administration; there have been many trade wars and they have been ongoing. The EU’s protectionism has more variants, in that it imposes tariffs, as well as massively complicated subsidies and high standards. The EU also markets itself better, convincing the world that it does in fact stand up for free trade when the opposite is true.
If European leaders, and especially Macron, want to be taken seriously, then maybe they should reread Donald Trump’s words about tariffs and trade from last year:
Otherwise they just look hypocritical.
This article was first published by The American Conservative.
Pictures are Creative Commons.
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