MEPs Warn of EU-Mercosur Trade Deal Quota Abuse by Large Agri-Firms

A letter circulating in the European Parliament expresses concerns about the concentration of power that could result from the quota allocation system within the EU-Mercosur Trade Agreement. The document warns of the potential for major South American agricultural firms to exploit this system.

Sent to EU Agriculture Commissioner Christophe Hansen and Climate Commissioner Wopke Hoekstra, the letter comes as the agreement is set to provisionally enter into force on May 1. This occurs despite ongoing warnings from European farmers about potential unfair competition from Latin American imports.

"In markets that are already highly concentrated, particularly in Brazil, there is a high risk that volumes will be captured by a limited number of large industrial groups with the financial and administrative capacity to access quotas and operate through subsidiaries located in Europe," the letter states.

The EU-Mercosur agreement, signed in mid-January between the EU and Mercosur countries (Brazil, Argentina, Paraguay, and Uruguay), aims to cut tariffs on both sides, creating a free-trade area covering over 700 million people. The deal, negotiated over 25 years, includes tariff-rate quotas for sensitive products such as beef and poultry. Specifically, 99,000 tonnes of beef per year will be permitted entry into the EU at 7.5% tariffs, and 180,000 tonnes of poultry at 0% tariffs, with both being phased in over five to six years.

However, these proposed limits have not appeased opposition within Europe. On January 21, the European Parliament took steps to refer the agreement to the Court of Justice of the European Union for an assessment of its legality.

The letter, initiated by Belgian liberal MEP Benoît Cassart, who is also a farmer, highlights the risk that Mercosur's agricultural powerhouses might dominate access to these quotas, given that the agreement permits Latin American countries to manage their allocation. The letter also points to a Commission regulation adopted recently in Brussels that implements this provision.

"Reduced-duty quotas allow certain large exporters to enter the European market more easily and secure outlets," the letter reads. "Once these commercial relationships are established, they can then increase their volumes by exporting beyond quotas, this time at full duties, but still to the same buyers.

"Quotas serve as a strategic entry point, enabling exporters to expand their presence and consolidate their position on the European market."

The letter is scheduled to circulate among MEPs until April 30.

Cassart’s office informed Euronews that the concerns are particularly focused on Brazil, where quota allocation is based on past export performance or financial and technical criteria that tend to favor established players. Brazilian meat giant JBS, which receives significant subsidies from Brasília, is identified as one of the companies singled out.

The letter urges the Commission to exclude beef and poultry from the quota management system delegated to Mercosur countries, ensuring that control remains "fully and exclusively" within EU hands. Failing this, it calls for the introduction of a review clause that would allow for reassessment based on indicators such as volume concentration and the number of operators benefiting from the quotas.