EU mulls Dutch rejection of Mercosur deal

The European Commission is awaiting formal notification that the Netherlands has rejected the EU-Mercosur trade deal.

The Dutch parliament this week requested that the country's government notifies the commission that the Netherlands withdraws its support for the free trade agreement (FTA) that was struck last year between the EU and the bloc made up of Argentina, Brazil, Paraguay and Uruguay. The resolution cites an increase in unfair competition for European farmers and a lack of enforceable agreements on protection of the Amazon or prevention of illegal deforestation.

This casts a cloud over the deal, under which the EU agreed to phase in, over six equal annual stages, a 200,000t annual quota for ethanol imports for all uses including fuel, with a tariff set at one-third of the most favoured nation (MFN) rate. The EU also agreed to a duty-free 450,000t annual quota for ethanol to be used for chemicals.

The EU ethanol industry is opposed to the deal.

"This was always a bad deal for EU ethanol and EU farmers," said European renewable ethanol association ePure's secretary general Emmanuel Desplechin. "The EU should not jeopardize the recovery of the the market for renewable fuel ethanol — and the farmers and the rest of the value chain — by allowing a flood of imports."

Desplechin last year said that ratification of the FTA will be lengthy and difficult.

The Dutch rejection does not kill the deal, although last year the then-EU trade commissioner Cecilia Malmstrom said that similar trade agreements have in the past required validation by all member states in addition to the European Parliament. The commission today said that the "specific legal steps" of the ratification process will only be determined after finalising formal translation of the text into all EU official languages and the legal review, which holds out the possibility of only a qualified majority of EU states approving the deal alongside the parliament.The commission today rejected that the FTA will lead to increased deforestation or unfair competition with European farmers.

"This trade agreement has a very strong chapter on sustainable development, legally binding commitments by the parties to their commitments to the Paris [climate] agreement. On the Brazilian side that includes important commitments regarding deforestation and protection of the rainforest," said EU trade spokesman Daniel Rosario.

Other objections to the FTA could come from Austria, Belgium, Ireland and France. Ratification is difficult for Belgium as the regional Walloon government opposes the FTA. The political programme signed by the coalition partners of Austria's current government also rejects Mercosur "in its current form". And last August, French president Emmanuel Macron signalled opposition to the deal, notably over alleged lack of action by Brazil against fires in the Amazon.

By Dafydd ab Iago