What's Happening?
The European Union Parliament has referred the EU-Mercosur trade agreement to the European Court of Justice, citing concerns over the legality of the deal's ratification process. The agreement, which has been in negotiation for two decades, was signed
in Asunción, Paraguay, and aims to facilitate free trade between the EU and Mercosur countries, including Brazil, Argentina, Uruguay, and Paraguay. The referral to the court was narrowly approved by a vote of 334 to 324, with 11 abstentions. The core issue is the separation of the trade elements from the rest of the agreement, which some argue bypasses the need for ratification by individual member states' parliaments. This move has sparked controversy, particularly in countries like Ireland, Hungary, and France, where there are concerns about the impact of cheap Mercosur goods on European farmers.
Why It's Important?
The referral of the EU-Mercosur trade deal to the European Court of Justice is significant as it highlights the ongoing tensions within the EU regarding trade agreements and their impact on local economies. The deal's potential to introduce cheaper goods from Mercosur countries into the European market has raised fears of unfair competition among European farmers, leading to protests in cities like Paris and Strasbourg. The outcome of the court's decision could set a precedent for how future trade agreements are structured and ratified within the EU, potentially affecting the balance of power between EU institutions and member states. Additionally, the delay in ratification could impact economic relations between the EU and South American countries, affecting industries reliant on international trade.
What's Next?
The European Court of Justice will now review the legality of the EU-Mercosur trade agreement, a process that typically takes around 17 months. During this period, stakeholders on both sides of the Atlantic will be closely monitoring developments. European farmers and agricultural groups are likely to continue lobbying against the deal, while South American countries may push for a swift resolution to secure market access. The court's decision could influence future trade negotiations and the EU's approach to international agreements, potentially leading to reforms in how such deals are ratified and implemented.
