Trade

Austria threatens to blow up EU trade deal with South America

Austrias parliament has emerged as a key threat to the EU trade agenda by threatening not to ratify an accord with South American nations that Brussels agreed in June.

Only 10 days before Austrias election, a committee in Viennas lower house on Wednesday adopted a motion that obliges the Austrian government to veto ratification of the EU-Mercosur accord in the Council of the EU, which is expected in the second half of 2020 at the earliest. The committee vote is binding and does not need further confirmation in plenary.

Viennas move heaps more trade-related pressure on incoming European Commission President Ursula von der Leyen, who is already facing an impending tariff war with U.S. President Donald Trump. It also revives the specter of 2016 when the regional Walloon parliament in southern Belgium almost scuppered Europes trade deal with Canada.

If Austria sticks to its guns, its veto would sound the death knell for the agreement because EU countries decided last year that the Mercosur deal would have to be ratified as a “mixed agreement,” requiring unanimity in the Council. The accord also needs to pass a vote in the European Parliament and in about 40 national parliaments across Europe.

“The Austrian parliament is not alone in this,” Bernd Lange, chair of the European Parliaments trade committee, tweeted on Thursday. “We must not conclude any agreement if it is clear from the outset that the contracting parties will not comply with important elements and that there is no means for effective enforcement of the provisions of the agreement.”

The EU and Mercosur concluded their landmark trade deal on June 28, after 20 years of negotiations. However, the agreement came under attack from European agriculture powerhouses such as Ireland, which fear that imports of beef, sugar and other commodities from the South American bloc (which is comprised of Argentina, Brazil, Paraguay and Uruguay) will harm their farmers.

Devastating fires in the Amazon rainforest (and Brazils much-criticized response) led to intensified criticism of the trade accord, and France last month also threatened to veto the deal if Brazil does not respect its environmental commitments under the Paris climate agreement, such as fighting deforestation.

Commission President-elect von der Leyen has come out in favor of the trade accord, which opens a giant market to EU auto and machinery producers as well as services and construction companies, but stressed that she was ready to quit the deal if Mercosur countries did not live up to their environmental commitments.

Cecilia Malmström, the EUs outgoing trade chief, has touted the deal as a job creator by opening “a market of almRead More – Source

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