Free trade at steak: How Macron’s beef with beef is making cars in South America more expensive
After 25 years of negotiations, the EU and the South American trade bloc, Mercosur, finally reached an agreement this December. The promise? A trade boom, cheaper food for Europeans and cheaper cars for Latin American consumers. But there is a roadblock in the way of the agreement’s ratification: France. Vocally backed by Poland, Paris has positioned itself as a defender of EU farmers and a zealous environmentalist – at the expense of everyone else involved.
The beef must flow
Mercosur – a trade union established in 1991 by Argentina, Brazil, Paraguay, and Uruguay, and later joined by Bolivia – has been pursuing a deal with the EU that would create one of the world’s largest free trade zones with a market of over 700 million people. The agreement would remove tariffs: Europeans would get cheaper beef, soy, poultry, fruits, and other products from South America, while EU companies would benefit from lower costs for sales of cars, machinery, and chemicals to the South American bloc members. In order to protect EU farmers from getting pushed out of their own markets by foreigners, the parties have negotiated certain limits on how much beef, chicken and soy can flow freely into the EU. The agreement also includes rules to follow the Paris Climate Agreement on reducing emissions, and to tackle deforestation in the Amazon rainforest.
European Commission President Ursula von der Leyen has been very enthusiastic about the agreement. Her excitement comes against the backdrop of US President-elect Donald Trump’s promises to seemingly launch a new global trade war by imposing massive tariffs on various countries – potentially including Mercosur’s founding member, Brazil. “We are sending a clear and powerful message,” von der Leyen told a joint press conference. “In an increasingly confrontational world, we demonstrate that democracies can rely on each other. This agreement is not just an economic opportunity. It is a political necessity.”
Aside from poking Trump, the political necessity could also be explained by the EU’s hopes for easier access to critical minerals available in the ground in Mercosur countries, which would stall China’s increasing influence in this sector.
Von der Leyen happily sealed the deal with Mercosur on December 6, much to France’s dismay, and to her native Germany’s joy. Paris has vocally condemned the deal, warning that a flood of cheap beef and poultry from South America will devastate its farmers and pointing out that it allegedly doesn’t meet EU standards. Berlin, on the other hand, can’t wait to use the opportunity to boost sales in new markets.
For the agreement to come into force, it needs to be ratified by all 27 EU members. France’s opposition prevents that from happening – and it has found an ally in Poland. Both countries are hoping that Italy will join their fight and create a blocking minority with them.
The big farmer issue
France is the largest agricultural producer in the EU. Its farms produce key exports like wine, dairy, and beef, which are all staples of French culture and commerce. Therefore, these farmers hold significant political influence. Historically, they’ve been capable of bringing the country to a standstill through protests, roadblocks and strikes – a variety of tools they’ve used successfully to pressure the government. Rising rural discontent in the country has provided fuel for President Emmanuel Macron’s political rivals.
Marine Le Pen, leader of the right-wing National Rally, has consistently positioned herself as a hardline defender of French farmers. She even showed up on a tractor during one of their protests at the beginning of this year. She advocates for protectionism and portrays the EU as detrimental to the nation’s agriculture.
Initially, Macron tried to emphasize the benefits of European integration for the farmers. But as Le Pen’s movement gained traction among rural voters by criticizing EU regulations, the president started introducing adjustments to his rhetoric. In 2021, the French government presented exemptions allowing sugar beet farmers to use neonicotinoid pesticides, which are banned at the EU level due to their harmful effects on bees.
During farmers’ protests in early 2024, Macron acknowledged the challenges posed by EU regulations, mentioning, however, that “blaming everything on Europe” would be “too easy.” Lastly, the French president has led the opposition against the Mercosur trade agreement, citing farmers’ grievances.
Marine Le Pen’s National Rally had a startling victory in the European election this summer, primarily due to rural sympathies. The current political dynamics in France, marked by the recent government collapse and stalled agricultural legislation, have intensified the rivalry between her and the president. As farmers’ frustrations grow, both leaders are hoping to grasp their support, with Le Pen using the situation to challenge Macron’s leadership. The National Rally leader has consistently opposed the Mercosur deal as well – to no surprise, as it falls in line with her general protectionist stance and broader criticism of EU practices. While for Le Pen this rhetoric is consistent, Macron seemingly chose this particular issue to challenge the EU in the way that could get him most political gains from his rival’s usual electorate.
Both politicians have cited the French farmers’ concerns that allowing cheaper Mercosur goods to enter the market would devastate them:
“Integrating Mercosur will drive prices down further and push consumers to buy even cheaper. We, sustainable farmers, must work three times harder to maintain our margins by processing and selling locally,” André Trives, a Slow Food farmer in southern France, has said.
The Irish government has estimated that the beef imported from Mercosur under the new trade deal will mainly consist of high-quality cuts, like premium steaks, which are sold at higher prices in Europe. Because of this, prices for these high-end beef cuts could drop by 3.3% to 7.2% as South American imports create more competition in the market. Essentially, consumers would pay less for meat.
While the French are world-famous protesters, consumers rarely organize and protest as effectively as farmers. The blame for the price hikes is often dispersed across a variety of issues – inflation, geopolitics and such. Farmers, on the other hand, are politically united, which makes them far harder to ignore. The same applies to Poland.
The presumed beef price drop may not be as overwhelming as it seems. In order to protect European farmers, the EU has limited Mercosur beef imports to 99,000 metric tons – split into 55% fresh beef and 45% frozen beef – with a 7.5% tariff. This quota is just over 1% of Europe’s annual 8 million metric tons of beef consumption, amounting to 221 grams per EU citizen – about one steak per year. Any imports beyond this quota face higher EU tariffs, keeping the impact on the market minimal. Brazil even complained about the EU only “half-opening” the doors to its market.
That said, Macron’s opposition to the Mercosur deal may play well in the streets of rural Normandy, but not throughout the EU.
The green excuse
Apart from the farmer problem, the French resistance is largely based on Mercosur’s green record – deforestation in the Amazon and the use of pesticides which are prohibited in the EU. President Emmanuel Macron has labeled the current agreement as “unacceptable,” emphasizing that it does not sufficiently address environmental standards.
French Agriculture Minister Annie Genevard has also spoken out against the trade agreement, citing health concerns linked to hormone-treated meat. In an interview with TF1, she said: “We don’t want this agreement because it’s harmful. It will bring in products, including substances banned in Europe, at the cost of deforestation. It will unfairly compete with our domestic production.”
The rainforest could allegedly be threatened by the significant expansion of cattle farming under the new agreement. Yet Brazil alone produces 11 million tons of beef annually, so the agreed quota of 99,000 tons, shared among the Mercosur countries, will not result in an overwhelming increase in beef production. On top of that, Brazilian President Luiz Inácio Lula da Silva has pledged to eliminate illegal deforestation by 2030, aligning with EU demands.
with regard to pesticides, the Mercosur bloc will have to follow European regulations – if the food meets EU standards, it will enter the market. If not, then not. But the French have refused to believe it. France’s Carrefour, one of the world’s largest supermarket chains with stores in over 30 countries, including Brazil and Argentina, has recently sparked controversy. Its CEO, Alexandre Bompard, said that “in solidarity with the ag world, Carrefour is committed to not selling any meat from Mercosur” due to the “risk of overflowing the French market with meat production that does not meet requirements and standards.”
Brazil’s Animal Protein Association (ABPA) was quick to fire back, calling the statement “clearly protectionist” and insisting Mercosur produces “high-quality products that meet all the criteria established by health authorities.” Bompard later retracted his comments, even praising Brazilian producers.
Macron’s environmental stance regarding the issue seemingly falls apart as well – especially given that France’s carbon footprint isn’t innocent either, with emissions from livestock farming and agriculture among the EU’s highest.
Who’s paying for France’s “Non”?
Macron’s opposition to the Mercosur agreement comes at a price: while the French farmers enjoy support on the issue from the two main sides of the French political spectrum, both EU businesses and Latin American consumers are losing out.
The deal could save €4 billion annually for European exporters following the tariff cuts on cars, machinery, chemicals and wine. Right now, EU businesses are facing tariffs as high as 35% on cars and 18% on machinery when selling to countries like Brazil or Argentina. Companies like Volkswagen, Renault, and BMW have to absorb these costs or pass them on to consumers. The high prices obviously make the South American market less appealing for European producers.
While EU companies are sidelined, global competitors like China are expanding their trade relationships with the market of hundreds of million people in Latin America, facing fewer trade barriers and supplying affordable cars and electronics. Without the deal, European businesses are missing out on the desires of emerging middle-class consumers in Brazil, Argentina, and Uruguay who want European cars, luxury products, and technology.
Latin American consumers face inflated prices for those European goods. A new car in Brazil is far more expensive than in Europe because of the tariffs on top of logistics. A Volkswagen or Renault vehicle in Brazil can cost 30-40% more than it does in Europe. Pharmaceuticals also face tariffs of 14% or more. European designer products remain far more expensive, even if we’re talking about fast fashion companies.
The French resistance is keeping European cars, technology, medicine and other goods from millions of South Americans. China and other competitors are stepping in to fill the void – something that the EU would probably want to avoid geopolitically at all costs. Both sides of the Atlantic are paying the price for Macron’s domestic political gamble. If Paris and Warsaw succeed in dragging Rome into forming the blocking minority for the Mercosur deal, they could potentially help Beijing increase its economic grasp on the globe.
