A momentous occasion for Mercosur and the EU, ushering in a new era for the sugarcane industry

On the 20th anniversary of the commencement of negotiations, the EU-Mercosur deal was finally reached. The confirmation, received on June 28th, caught many by surprise despite the growing cautious optimism. A week later, as more details emerge, it is crucial to acknowledge the extensive effort invested in achieving this agreement. While compromises were inevitable, the agreement stands as a robust testament to the mutual benefits of collaboration and the belief that they far outweigh the drawbacks.

From the standpoint of the sugarcane industry, while higher zero-tariff quotas for sugar and ethanol would have been preferable, understanding the delicate balancing act and limitations faced by negotiators is essential. The industry welcomes the opportunity to enhance the positioning of its products in collaboration with European industry and consumers amidst increased trade.

The elimination of the €98 in-quota rate on 180,000 tonnes of sugar will offer European refiners improved and more affordable access to high-quality cane sugar, expanding choices for consumers and the European food and drinks industry. Given the current EU sugar consumption of around 17 million tonnes, the removal of the TRQ on 180,000 tonnes of imports from Brazil is relatively minimal and will not significantly impact the European sugar industry.

The industry also welcomes the duty-free quota on ethanol for industrial use, amounting to 450,000 tonnes. This grants the European chemical industry better access to a sustainable feedstock, fostering substantial growth in the sector. Simultaneously, the quota of 200,000 tonnes of ethanol for all uses, including fuel, with a reduced in-quota tariff (equal to 1/3 of the Most Favored Nation tariff), creates opportunities for ethanol utilization in various industries. As one of the most carbon-efficient and sustainable biofuels, this opens avenues for sugarcane ethanol to support Europe's decarbonization efforts in the transport sector.

Despite lingering environmental concerns, a stringent sustainability chapter has been outlined, emphasizing a joint commitment to effectively implement the Paris Climate Agreement. The sugarcane industry, having already made robust commitments to sustainability and labor protections, assures that increased trade will not compromise these commitments.

Considering the broader Association Agreement, including the political and cooperation pillars agreed upon in 2018, there is confidence that increased possibilities for trade and cooperation will bring widespread benefits. Congratulations are extended to both Mercosur and EU authorities on this significant agreement.