A study by two European researchers refutes the idea that the agreement between the European Union and Mercosur would be catastrophic for French agriculture – France’s main argument for opposing the free trade agreement.
The article, entitled “European Union-Mercosur Agreement: consequences for the EU livestock sector”, was published in September in the scientific journal “Journal of Agricultural Economics”. By running simulations, he concludes that the import quotas imposed in the Mercosur products treaty almost eliminate the effects on local production.
“As the supply of beef is limited by additional import quotas, the negative impacts on livestock sector income are strongly mitigated,” the authors say. “We also found that the European livestock sector and, more generally, the agricultural and food sectors benefit from the increase in income brought about by the other parts of the agreement. Finally, we did not see greater negative effects in countries that currently oppose ratification, notably France, because their consumers prefer domestic foods.”
THE Leaf spoke with the authors, Alexandre Gohin, researcher at the National Institute for Research on Agriculture, Food and the Environment (Inrae), in Rennes, France; and Alan Matthews, professor at Trinity College Dublin, Ireland.
“Our aim in writing this paper was to highlight that, in reality, the scale of the impact has been wildly exaggerated in the current debate. As the paper shows, the quantitative effect of the deal itself is extremely limited,” Matthews explains.
In the main simulated scenario, the study concludes that the agreement would have a negative impact of only 0.35% and 0.14%, respectively, on the income of the EU livestock and agri-food sectors. In the specific case of France, these losses would be 0.19% and 0.05%. Conversely, the positive impact would be 0.66% and 0.65% on the same sectors in Mercosur.
These percentages, considered low by the authors, are due to the fact that the agreement imposes very restricted quotas for meat imported from Mercosur: in the case of meat, a net and a half per year and per EU inhabitant, according to a comparison frequently used in the French press.
The paper uses data modeling techniques established in previous studies to predict trade flows. This modeling is the specialty of the Frenchman Gohin. “In its analyses, the European Commission did not detail the impact on the different member countries. I said to myself that it was necessary,” he explained.
Gohin admits that reality is too complex for foolproof prediction, but explains that projection helps identify trends. “Economic agents react to various signals, such as prices. There may be things that we do not anticipate, for example difficulties in recruiting (labor).”
“Actually, I would say we won that argument,” says Alan Matthews. “The debate has moved from the quantitative impact to the question of reciprocity, due to the fact that Mercosur countries do not respect the same standards, particularly environmental ones,” he adds.
According to him, even in this area, approval of the agreement would be beneficial. This would, for example, help Brazil to better control deforestation.
“If we refuse to ratify the agreement, Brazil will say: ok, we will sell our meat to China. And China is not at all interested in knowing whether this meat comes from deforested lands or not,” he argues.
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