Austria's trade dispute: Mercosur agreement before a decisive turn!

Austria's trade dispute: Mercosur agreement before a decisive turn!

In Austria, the controversial free trade agreement between the EU and the Mercosur countries, consisting of Argentina, Brazil, Paraguay and Uruguay, is again hotly discussed. The European Union wants to promote the conclusion of the agreement in order to counteract economic uncertainties due to new tariffs from the United States. ÖVP Minister of Economics Wolfgang Hattmannsdorfer has now clearly spoken out for the agreement and emphasizes: "I am for Mercosur, and we now need this agreement", as

The free trade agreement promises to create the largest free trade zone in the world and affects over 700 million people. The EU's economic and geostrategic goals aim to create advantages for European industry. Favorable exports and import advantages are intended to strengthen the independence of China and the USA and improve trade connections with other regions. According to Tagesschau Imported Mercosur 2022 were worth 55.7 billion euros from the EU, while exports to the EU were 53.7 billion euros.

political positions in Austria

The support for the agreement in Austria is inconsistent. So far, the SPÖ has been strictly rejecting the NEOS. Hattmannsdorfer emphasizes that industry and business in Austria support the agreement, while agriculture and employee representatives mobilize. Different opinions come to light within the ÖVP: a strict no comes from the farmers' association, while the business association sees the agreement positively.

The controversial discussion is accompanied by the Chamber of Labor and the ÖGB that mobilize against the plans. The concerns regarding the agreement include the fear of cheap competition from South America and lower environmental standards. These concerns are reinforced by the protests by environmentalists who fear ecological consequences, in particular a possible environmental degradation in the Amazon area.

international reactions and concerns

Although resistance to the agreement in Austria is slowly disappearing, France is skeptical. The French government expresses reservations and fears disadvantages for the domestic economy, especially for farmers. These views are shared by some other EU countries, which could make ratification more difficult. Germany, on the other hand, has recently spoken out for the conclusion of the agreement, which reflects the mixed signals from the EU.

Hattmannsdorfer refers to the progress in the renegotiations in which objections from agriculture and questions about sustainability were taken into account. He sees the specific concerns as cleared. In order to ensure a balanced trade relationship, the agreement contains protective mechanisms for sensitive agricultural products, such as a beef contingent of 99,000 tons.

economic effects and future prospects

estimates could benefit up to 60,500 European companies from the agreement. According to the Institute of German Economy (IW), EU BIP will increase by just 0.06% by 2040. Brazil, on the other hand, is seen as the greatest profiteer of the agreement, with a forecast GDP increase of 0.46%.

The formal signing of the agreement is expected in the second half of the next year. The EU Commission plans to invest time and energy in this process and saw great potential in the agreement. Despite the optimism, the path to ratification is still long and with many political challenges.