The European Union and Mexico: a free trade agreement and a pandemic

, by Aliénor Thouvenot, translated by Tiffany Williams

The European Union and Mexico: a free trade agreement and a pandemic

On Tuesday 28th April 2020, the European Commission announced that it had concluded negotiations for a free-trade agreement with Mexico, one of the EU’s main trading partners in Latin America. The trade agreement, which will lift almost all tariffs on products traded with the EU (particularly on agricultural ones), has drawn strong reactions and provoked concern for many farmers and environmentalists in a context marked by the current public health crisis.

Having been in negotiation since 2016, the bilateral free trade agreement (FTA) between the European Union and Mexico was finally signed by both parties on May 4th, 2020. According to the European Commissioner for Trade, Phil Hogan, the EU must develop its current FTAs and seek to build others with new partners. “While most of our efforts have been focused lately on tackling the coronavirus crisis, we have also been working to advance our open and fair trade agenda, which continues to be very important,” he said of the deal concluded with Mexico. The way is now clear for the agreement to be signed and ratified, according to both partners’ respective rules and procedures. Whilst Phil Hogan, a former European Commissioner for Agriculture, endorses a liberal vision of EU trade policy, particularly encouraging exploration of new Asian and American markets, the agricultural sector dreads the economic and financial repercussions the FTA will have on European food producers and manufacturers. .

A long-standing agreement with a privileged EU partner

Mexico is the European Union’s main trading partner in Latin America. With an estimated €66 billion worth of goods and €19 billion worth of services traded between them each year, Mexico seeks to strengthen its trade policy by signing a FTA with the EU. Since the original agreement came into effect in 1997, the market between the two parties has almost tripled in size. It is therefore not surprising that, two years after a preliminary agreement was struck, Phil Hogan and Graciela Márquiz Colín (Mexican Minister of Economy) announced that they had concluded negotiations for a new FTA. The EU and Mexico both wanted to make major changes to the earlier FTA, which had had been in place since the early 2000s. One of its main objectives was the removal of almost all customs duties from goods exchanged between the two parties.

Agricultural products, which were not previously included, will have a central place in the new FTA. The agreement will open the European market to imports of 20,000 tonnes of Mexican beef per year at a greatly reduced duty rate (7.5%). Pork and poultry will be completely liberalised (that is, with no customs duties) with a preferential duty for 10,000 tonnes. On the export side, the EU will benefit from better access to the Mexican market for cheese and dairy products. The agreement notably provides a tariff quota of 20,000 tonnes in five years for mature cheese and 5,000 tonnes in five years for fresh cheese. In addition, the agreement aims to support both parties’ economies by implementing innovative regulations for economic and fiscal policy. The EU, for example, will include investment protection clauses for the first time in a deal with a Latin American country. Through this deal, it will be easier for European producers and exporters to sell their products in Mexico and vice-versa. Finally, the agreement aims to boost employment: the simplification of exporting to Mexico should benefit all businesses in the EU, especially those who produce and sell goods such as agri-food products, mineral fuels, medicines and transport equipment.

Despite this, however, stakeholders in the agricultural sector, particularly in France, do not share the EU and Mexico’s enthusiasm. This is the case for several reasons.

Growers and meat producers: split between fear, anger and indignation

Insofar as it is a public health issue, food safety remains a very sensitive subject, as shown by the controversies around the signing of FTAs between the European Union and American markets in recent years. Indeed, the relevant standards in the production and marketing of food products have received increasing attention from stakeholders in the agricultural, agro-industrial and food supply industries. They are especially committed to the industrial and commercial practices of agri-food businesses.

In France, inter-professional associations of meat producers (Interbev), consumers’ associations (UFC Que Choisir) and agricultural unions (Confédération paysanne; Fédération nationale des syndicats d’exploitants agricoles; or Coordination rural) categorically oppose this new treaty coming into effect. They fear that the agreement will result in a race to the bottom for existing social, health and environmental standards; that it will harm consumer rights; and that it will encourage certain abusive practices used by large agri-food corporations. In a press release, Interbev raised the point that “Mexican beef, which does not offer sufficient health and safety guarantees, was excluded from commercial trading between the EU and Mexico until now.” Furthermore, detractors have highlighted that importing agricultural products with less strict standards than those set by the EU contradicts two European Commission strategies: the European Green New Deal, and the “Farm to Fork” strategy. These combined initiatives proposed by the Commission aim to guarantee European citizens a secure supply of safe, high quality food.

Promotion of European agriculture works by protecting producers and farmers. Despite this, they risk becoming the major losers in this agreement. They will certainly not benefit from higher prices, nor from the tax revenues created by reduced custom duties - and will instead face intense competition from Mexican producers. Indeed, if trade with Mexico is liberalised without regulatory convergence, European producers could suffer the negative effects of competition, and could be disadvantaged in comparison to American producers by the additional costs entailed by conforming to European standards, particularly restrictions on the use of genetically modified organisms (GMOs), pesticides and health and safety measures in the meat industry.

No less importantly, European farmers are frustrated by the European Commission’s doublespeak, which constantly oscillates between a return to localised production, and the globalisation of agriculture.

Where does food sovereignty fit in the “new normal”?

At a time when the COVID-19 epidemic has disrupted our way of life and is throwing the future of consumption into question, the issue of food sovereignty has never been so relevant. In mid-March, French president Emmanuel Macron alleged that “delegating our food supply to others [was] madness”, while on April 2nd, the Commission announced that it was working on a new proposal for the European budget factoring in the public health crisis. These strong political signals, however, cannot but be weakened where contradictory decisions are struck by the EU. The Common Agricultural Policy, one of the Union’s main expenditures, was discussed at the European summit on February 20th 2020, where Charles Michel, President of the European Council, proposed that up to €80 billion could be cut from its €430 billion budget between 2021 and 2027. In any case, signing FTAs which do not respect European health and environmental standards compromises the food sovereignty which the EU claims to aspire to.

Yet this public health crisis shows precisely why agriculture remains a priority sector, that must be protected and supported to assure a food supply of sufficient quantity and quality to satisfy the needs of our populations. The FNSEA (French umbrella organisation for agricultural unions) and Deutscher Bauernverband (DBV) hold a similar view. In a statement on 19th May, the day after the meeting between the French president and the German Chancellor about the European economic recovery plan, they confirmed that “agriculture must be treated as an essential sector in the remit of the European recovery plan.”

Consequently, if nothing is yet decided about in the implementation of the agreement between the EU and Mexico (to be definitively adopted, the agreement must be translated into the twenty-seven languages of the EU, approved by the governments of the Member States and ratified by the European Parliament), politicians and stakeholders in the agricultural sector must make efforts to promote a European food sovereignty that is consistent and fair to producers and consumers.

Note: A few days after this article was written, Dutch MEPs rejected the agreement between the EU and Mercosur.

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