At the heart of this controversial agreement is the elimination of trade tariffs. Import duties will be abolished on 91 percent of exports to Mercosur countries. For German manufacturers of machinery and automobiles, this means their goods will be cheaper in Mercosur countries — Argentina, Brazil, Bolivia, Paraguay, and Uruguay — than before, since they will enter those markets duty-free. Until now, the tariff on German cars was 35 percent of their value. The president of the German Association of the Automotive Industry (VDA), Hildegard Müller, told German media that this creates enormous opportunities for car manufacturers and suppliers. In 2023, Germany exported 20,700 passenger cars to Argentina and Brazil. These numbers could multiply several times over after the elimination of tariffs.
According to the European Commission, this will save European businesses four billion euros annually. In return, the EU intends to abolish 92 percent of all import duties on goods from the Mercosur region entering Europe. On the Mercosur side, agricultural producers and raw materials companies will benefit most. Beef, which was previously subject to a 60 percent duty, will become particularly cheap in Europe.
Government spokesperson Christiane Hoffmann stated clearly at a press conference that Germany wants this agreement. At the same time, she noted that Germany's goal is for the agreement to be accepted by all member states and with the consensus of all stakeholders. Journalists asked whether this is even possible, given that France is categorically opposed. Hoffmann could not find a convincing answer to this question but repeated that Germany is in constant contact with French representatives and striving for a compromise.
Germany sees the Mercosur agreement as an opportunity for its struggling industry. The Mercosur-EU agreement is intended to give Germany better access to South American markets, cheap raw materials, and trade partners.
French and Polish media are cited in the German press as the main opponents of the Mercosur deal. On December 6, the main news program on the public broadcaster ARD stated in this context that the opposition of these countries does not necessarily mean the agreement will be blocked.
At the government press conference, there was a lively discussion about how to circumvent a potential French veto and that of its allies. Christiane Hoffmann outlined Germany's two main strategies on this matter. Germany's primary interest is keeping this agreement away from decisions by national parliaments. For this reason, Germany worked during the negotiation stage to ensure the agreement was structured so as not to touch on the competencies of member states. In this context, Germany speaks of the so-called "EU-only" option. Under this option, all decisions would be made at the European level, where a compromise can be reached within the European Council. The second option is a possible division of the agreement's topics into "EU-only" aspects and aspects requiring the consent of member state parliaments. Those parts falling under EU competence could enter into force earlier than those decided by the national parliaments of European countries.
[Aleksandra Fedorska is a journalist for Polish and German media outlets]
