There are fears that France and other countries will be unhappy with beef imports
The European Commission is working on a new budget fund to compensate for the farmers for any negative impact of the agreement between the EU and Mercosur. C it hopes the money will help overcome France’s opposition to the trade deal, Politico reports.
The plan, confirmed by four officials, comes as the EU and the South American bloc seek to finalize a landmark agreement at the G20 leaders’ summit in Rio de Janeiro on November 18-19.
Most importantly, the compensation fund it is already being welcomed by France, the biggest opponent of the Mercosur deal, which harbors concerns that its farmers will suffer from a glut of South American imports such as beef.
A spokesman for the Commission declined to comment.
The Mercosur deal will open the markets of Argentina, Brazil, Paraguay, Uruguay and Bolivia to European exporters – offering growth opportunities at a time of rising trade tensions with China. In total, some 800 million people on both continents could benefit from freer trade.
Although France is unlikely to have the power to block the Mercosur deal in a vote among EU countries, officials in Brussels as well as in Berlin have stressed that they want to avoid imposing the trade deal against the will of the EU’s second-largest economy.
Mercosur’s compensation fund could also calm concerns in other skeptical EU countries such as Ireland or Austria.
The idea, which is still at a preliminary stage, has precedent: in 2021, the EU created a €5.4 billion Brexit adjustment reserve to protect industrial sectors such as fisheries from the potential negative impacts of the UK’s exit from the EU. Moreover, a similar compensation fund for the Mercosur deal was already proposed by former EU trade commissioner Phil Hogan in 2019.
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