The negotiations between the European Union and the Mercosur (Brazil, Argentina, Uruguay, Paraguay and Venezuela in the process of joining) on agricultural trade access were first re-launched in May 2010, when European Parliament members were already concerned by the potential consequences for European agriculture1. Meetings were again held in Brussels between March 14 and 18, 2011, before a next round of negotiations scheduled between May 2 and 6, 2011 in Paraguay. The event gave European Parliament members the opportunity to reaffirm once again their disapproval.
Since the onset of the negotiations, the European Parliament does not even have a single quantitative study that would accurately assess the impact of such trade agreement on European agricultural markets. According to these elected officials, such uncertainty is dangerous and would not represent fertile ground to randomly conclude any agreement. They are thus now calling the Commission to carry out and release impact studies prior to any discussion.
Admittedly, many issues remain unanswered: How will markets react? Is it going to increase price volatility? What will the consequences be in terms of production, supply and food security?
Yet, these critical issues, which are now raised by the European Parliament, remain unanswered. Let’s not forget that, at the present time, European decision-makers cannot rely on any economic simulation model capable to assess the impact of opening European trade to other regions, as well as consider the various risks inherent to agricultural markets, whether they be natural (climatic hazards of epizootic diseases), and above all financial (agricultural market financilalization).
A study conducted by momagri in 2009 did show that in case of liberalization of all agricultural markets worldwide:
• The volatility of agricultural commodity prices would be intensified;
The goal of the European Commission to increase the EU agricultural trade is certainly a commendable one, but it must not eventually be achieved at the expense of Europe’s interests in the framework of the CAP overhaul. Identifying, comprehending and assessing the risks of any trade access are the required steps prior to any economic, political or strategic decision-making. This is even more valid in agriculture, which is a strategic field. While the benefits from Doha talks are now more than ever being questioned, it is important for Europe to concretely assess costs and profits for agriculture that are tied to the conclusion of such an agreement, and avoid making an irremediable decision that could destabilize an already fragile economic sector.
• Farmers in poorer countries would experience an income drop of 60 to 80 percent in certain years;
• Farmers in emerging exporting nations would confront plummeting revenues––30 percent for China, 40 percent for India––depending on years;
• The income of farmers in developed countries would be lowered by approximately 30 percent;
• Only emerging exporting nations, such as Brazil, could come out unscathed.
1 Please see momagri June 21, 2010 article 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