Poland, France reject EU-Mercosur trade agreement over farmer concerns

The Polish Prime Minister Donald Tusk said that his government opposes the prospective EU-Mercosur free trade deal, joining France in rejecting the current deal due to concerns that it will hurt Polish farmers and food security.

"Poland will not accept ... the free trade agreement with the South American countries, that is, the Mercosur bloc, in this form," the prime minister told reporters before a cabinet meeting on Nov. 26.

Brazilian President Luiz Inacio Lula da Silva, however, said on Nov. 27 that he hoped the trade deal would be signed by year-end.

"We will get it done," Lula told an event hosted by industry group CNI in Brasilia. "Von der Leyen has the mandate to make this agreement, and I intend to sign it this year."

Mercosur, comprising Brazil, Argentina, Uruguay, Paraguay and recently Bolivia, is a key market for EU manufacturing exporters. The EU-Mercosur trade deal, negotiated for 25 years and announced in 2019, remains unratified due to EU demands on addressing Amazon deforestation and climate change.

Farmers say that if implemented, the deal would disadvantage them by making it challenging to compete against large imports that are not restricted by stringent EU regulations.

The Polish agriculture ministry earlier this month cautioned the deal may negatively impact Polish poultry and beef, sugar and ethanol producers the most.

Producers have said the EU-Mercosur deal would also allow for the phase-in, over six equal annual stages, of a 200,000 mt yearly quota for ethanol imports for all uses, including fuel, with a tariff set at one-third of the most favored nation (MFN) rate, according to S&P Global Commodity Insights. The EU also agreed to a duty-free annual quota of 450,000 mt for ethanol to be used for chemicals.

The deal would also allow the entry of 190,000 mt of sugar and 1 million mt of corn.

"What future for our French farmers if the EU-Mercosur agreement is ratified as it stands?" Olivier Leducq, Group CEO at Tereos, said earlier this week on LinkedIn, expressing "great" concerns regarding the proposed free trade deal. "We call on France to continue to support this position and to rally other Member States to ensure that this agreement is not imposed by the European Commission. The impacts on the sugar and ethanol sector would be significant."

Platts, part of S&P Global Commodity Insights, assessed T2 ethanol at Eur646.25/cu m FOB Rotterdam Nov. 26, reaching a near four-week low, amid reports of healthy T1 imports.

"Prices at Eur650/cu m are probably at a good level, but if they fall below that, then production margins will be killed," a source said.

The same source added that rising prices are often pressured by imports.