France is leading a coalition of European Union member states against a trade pact with countries in South America that has stalled for nearly two decades.
“Tactically, it is not in the EU’s interest to make at this stage proposals corresponding to the main offensive interests of our partners,” France, along with countries like Ireland and Poland, has argued.
The European Commission is planning to exchange proposals for a trade agreement with Mercosur later this month, the customs union between Argentina, Brazil, Paraguay, Uruguay and Venezuela. The two blocs have been pining for a deal since 1999.
France, governed by its Socialist Party, is critical of European trade negotiations with the United States as well. President François Hollande warned this week that “at this stage, France says ‘no'” to a proposed transatlantic trade pact.
The countries in the EU and Mercosur traded goods and services worth €93 billion last year, with Brazil accounting for the bulk of the volume on the South American side. European exporters pay around €4 billion in tariff duties on their trade with South America every year.
The EU is a major exporter of pharmaceuticals and machinery to the continent whereas Mercosur is a leading producer of beef and ethanol.
The Financial Times reports that the EU runs an industrial surplus with Mercosur, exporting €47 billion worth of goods against €23 billion in imports.
But the imbalance goes the other away in agricultural goods and this is far more lopsided. Mercosur countries export €21 billion worth of farm products to the EU and import only €2 billion.
Hence countries like France and Poland are apprehensive about liberalizing trade. Both are major agricultural producers themselves and rely heavy on EU farm subsidies and protections.
Spain, by contrast, which still has close ties with its former colonies in South America, is among the leading proponents of the trade deal. Last week, its foreign minister, José García-Margallo, expressed confidence that once the talks are started, “it will be possible to resolve the issues that France has raised.”