A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

The liberalization of agricultural trade between Europe and Latin America raises many concerns

9 May 2011


Negotiations between the European Union and Latin America regarding the liberalization of agricultural trade resumed in Asunción, Paraguay, on Tuesday, May 3. The two regional blocks would like to progress on the issue, even though a recent European Commission impact study has just outlined the detrimental consequences that would result from such liberalization.

Many had been waiting for the impact study conducted by the Agricultural Division of the European Commission. European Parliament members in particular had pointed a finger to the lack of data and the uncertainty on the expected benefits1, both representing a fertile ground for "misguided" agreements.

The results now are in. The Commission demonstrates that a potential free-trade agreement between the EU and the Mercosur will have a "negative" global impact on the Union's agricultural activities, whose revenues would be lowered by 0.5 to 3.2 percent, depending on scenarios2. As an example, beef production would decline by more than 150,000 tons and prices paid to cattle farmers would drop by eight percent or even more.

A feeling of concern is therefore increasing in European circles. Let's not forget that, almost a year ago, European Parliament members had made public their unease regarding the risk of what Irish MEP Mairead McGuiness3 called the "selling off of European Agriculture." Today, it is the European farmers' turn to raise their voices, and COPA President Gertd Sonnleitner states, "Should an agreement be reached, the EU would become totally dependent on other nations to guarantee its food security, and would thus be confronted to these nations' climate hazards as well as their policy decisions."

This Study corroborates momagri's findings based on larger and more global scenarios of total liberalization of trade barriers starting in 2010. In fact, a study conducted by momagri in 2009 showed that in the case of liberalization of all agricultural markets worldwide:
    • Agricultural price volatility would increase;

    • Farmers in poorer countries would see their sales declining by 60 to 80 percent;

    • Farmers in importing emerging countries would see their sales deteriorate by 30 percent in China and only 40 percent in India, depending on years;

    • Sales figures for farmers in developed nations would drop by 30 percent;

    • Only exporting emerging countries, such as Brazil, would come out unscathed.
Nevertheless, Karl de Gucht, the European Trade Commissioner, insists there is an agreement from all members of the European Commission to advance with the negotiations that should be finalized sometime at the end of 2011 or in early 2012.

The position of the European Commission therefore seems to be somewhat schizophrenic. On one hand, it wants to send a strong political signal to the international community by revitalizing the cooperation with Latin American nations and by reasserting its stand against protectionism. On the other, the EU is retaking negotiations with the goal to reach an agreement, which is now seen as having a negative impact and threatening the sustainability of its farms, and more globally international agricultural balance.

It is therefore crucial not to heed to "political siren calls" by achieving an agreement whose economic consequences would be as detrimental as irreversible concerning a strategic sector such as European agriculture. While is its vital to reassure international markets and to fight protectionist practices that destabilize markets, we must not adopt the opposite stance that would totally free agricultural trade in zones that radically differ in economic as well social terms.

This is the very focus of current G20 negotiations, which, in the current context, are now more critical than ever for the EU: Defining a new approach for international agricultural trade that reconciles free-trade and regulation, so that we can profit from the advantages of open markets without paying a price that would weaken an sector whose economic and strategic interest keeps growing.

1 Please see momagri March 21, 2011 article at http://www.momagri.org/UK/a-look-at-the-news/Trade-negotiations-with-the-Mercosur-Which-consequences-for-the-European-Union-_870.html
2 From the May 2, 2011 issue of Agra Presse Hebdo.
3 Please see momagri June 21, 2010 at http://www.momagri.org/UK/a-look-at-the-news/Members-of-European-Parliament-are-concerned-about-free-trade-negotiations-between-the-EU-and-MERCOSUR-_707.html
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