France and Germany are vying for a free trade agreement with South America. The outcome of the Mercosur dispute will have a direct impact on the Swiss economy.
Stefan Brändle, Paris/ch media
“Operation Snail” started on Monday morning: two tractors traveling at walking speed were enough to paralyze the N118, the entrance road to the motorway southwest of Paris. Farmers then drove their heavy vehicles slowly through 80 intersections across France. Since then, there have been new closures every day.
Many farmers staged protests on Sunday.Image source: IMAGO / ABACAPRESS
The farmers' protests are targeting the so-called Mercosur agreement signed by the EU with Brazil, Argentina, Uruguay, Paraguay and, most recently, Bolivia. It creates more free trade in European products such as cars, pharmaceutical products or financial services; South America wants to supply beef, poultry and sugar. For example, the European Commission estimates that South America will produce 99,000 tons of “beef” annually.
As an exporting country, Germany is very interested in the deal, as Chancellor Olaf Scholz recently confirmed. However, according to French farmers' association FNSEA, this “cheap competition” threatens thousands of farms, which must comply with higher environmental standards than in South America when it comes to hormone management, for example. The Greens also complain that EU standards on deforestation, particularly in the Amazon, are uncontrollable. Other parties in Paris also oppose Mercosur.
President Emmanuel Macron, who has been on a tour of South America since Saturday, said on the first stop in Buenos Aires that France would not sign the deal “in its current form.” Opinion polls show that 88% of French people oppose Mercosur. In front of television cameras, most people surveyed in the land of good food said they would rather spend a little more for a slightly better Bifteck. Macron, who is essentially a supporter of free trade, cannot help but take a stand when it comes to Mercosur. The president, who is grappling with domestic politics, even admitted the issue would derail his entire trip to South America this week.
Sunday's tractor column.Image source: IMAGO / ABACAPRESS
France is more isolated than ever in the European Union. Most partners, including Germany, see the two-continent deal as an opportunity for Europe to counter U.S. or Chinese protectionism. Beijing is investing billions of dollars in South America and last week opened a major port in Peru for its “New Silk Road”. South America also exports minerals such as lithium and cobalt, which form an important basis for Europe's technological independence in areas such as smartphone production.
Does Switzerland also have an agreement?
To shore up his domestic political support, Macron is scheduled to hold a debate in France's National Assembly next Tuesday – knowing full well that most parties will vote against Mercosur out of concern for rural voters. Agriculture Minister Anne Jawad is currently trying to form an opposition minority to the Mercosur treaty in Brussels.
But even agricultural countries like the Netherlands, Ireland and Poland tend to choose Germany. France may end up alone – and must submit to a majority vote. This would be an unprecedented shame for our great country. At the urging of Germany and Spain, the negotiating partners have scheduled a signing in Montevideo on December 6. There are reports in Paris that Macron may boycott the ceremony.
The Swiss economy is watching the EU tug-of-war with great interest. EFTA members Switzerland, Norway, Liechtenstein and Iceland also negotiated a free trade agreement with the four Mercosur countries in August; they are awaiting the EU's Mercosur agreement. Swiss farmers and the Greens sided more with France, while business representatives sided more with Germany. Decisions will have to be made in the next two weeks. European Commission President Ursula von der Leyen is working on a compromise: She will reportedly provide a €1 billion aid fund to compensate farmers who have caused harm to Mercosur. It remains to be seen whether the Mercosur deal, discussed for a quarter of a century, can be saved. (aargauerzeitung.ch)
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