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Opinion National Interest PoV 50-Word Edit

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Why EU-Mercosur FTA should interest India

India-EU negotiations on investment protection and geographical indications are ongoing. They’re an opportunity for New Delhi to secure terms similar to those Mercosur achieved.

Three months before the European Union prohibited Brazilian beef, India finalised a significant trade agreement with Brussels. The timing highlights the importance of a particular clause in Europe’s other major trade agreement—the one with Mercosur—for Indian stakeholders. The clause illustrates the nature of protection against potential policy reversals by Europe, making it particularly pertinent for India’s agreement with the EU.

The EU-Mercosur agreement, which took 25 years to negotiate, was implemented on 1 May this year. Brazil, the largest economy within the bloc, had waited the longest for the reduction of tariffs.

A mere 11 days after implementation, the agreement faced its first significant challenge. On 12 May, following extensive protests by European farmers, Brussels declared a ban on Brazilian beef, chicken, eggs, and honey from the EU market. Effective on 3 September, the ban was announced due to concerns over antibiotic use on Brazilian farms. This decision effectively restricted the market access that Brazil had been promised. Brazil expressed surprise and committed to contesting the decision. The scenario exemplifies the purpose of a specific clause within the agreement.

Known as the rebalancing mechanism, the clause allows Mercosur to seek compensation, increased quotas, or reduced tariffs if a new EU regulation on food safety or emissions affects the market access initially promised. This compensation is not something Brazil must request; it is a provision guaranteed by the treaty, established years before any........

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