US$ 4 billion in US agricultural exports at ‘risk’ due to EU-Mercosur agreement

Analysis by the United States Department of Agriculture’s Foreign Agricultural Service (FAS / USDA) points out that the country has US$ 4 billion in agricultural exports that may be affected to some extent by the trade agreement between the European Union and Mercosur. The agreement has yet to be ratified by national parliaments.

One of the American products that can be harmed is ethanol, which makes up 28% of the EU’s ethanol imports according to the American agency. Between 2015 and 2019, the American ethanol market share in the European market was, on average, 22%, while Mercosur’s share was 7%.

With the agreement with the EU, Mercosur will have a quota-free quota for 570 million liters of ethanol for industrial use and 253 million liters of ethanol for other uses, including fuel. The FAS notes, however, that other countries also export ethanol to the European bloc, and it is not yet known which exporting countries will be most affected.

American meat exports, on the other hand, should not be much affected, in the assessment of the agency, because the United States also recently made a bilateral agreement with the EU that increased the quota of American meat imports in the European bloc. Under the bilateral agreement, the quota for American meat started in 2020, with 18,500 tons, and will grow progressively to 35,000 tons in 2026.

In addition, EU quotas for the United States and Mercosur differ by product, which reduces impacts on Americans, according to the agency.

In the opening of the market that Mercosur will promote to EU agricultural products, the impact on American exports should be more dispersed among different items with added value, such as intermediate products (enzymes and gluten, for example), food preparations, dairy products, feed, and processed vegetables.

Although the USA and the EU have similar products in the categories of ingredients – prepared and processed – that they export to the Mercosur countries, the American body sees difficulties in the countries of the South American bloc in substituting products from one source for another, depending on the specificity of the products. goods.

The American Foreign Agricultural Service also considered that the agreement between the EU and Mercosur set an important precedent in recognizing 350 geographical indications of European products, the biggest commercial arrangement ever made on the subject. The precautionary principle – against sanitary and human issues – is also seen by the USA as a victory for European diplomacy, which can be applied in other ongoing negotiations by the bloc.

Source: Valor Econômico

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