Mercosur, again but what about Malta?

Mercosur Economic Alliance was created in 1991 and includes Argentina, Brazil, Uruguay, Paraguay and Bolivia since 2023. In 2019, the European Union and the Mercosur countries reached an Association Agreement with 2 main objectives: 1) trade relations development and 2) cooperation and political dialogue promotion. Current negotiations concern only an additional protocol on sustainable development including deforestation and climate change.

What does this Association Agreement mean for Malta and its agricultural sector? Concretely, it means that agricultural trade exchanges between the EU (and therefore Malta) with these countries have been encouraged by reducing the tariffs in place. Nevertheless, the European Commission negotiated food quotas on importation from the Mercosur countries. Food importations above these quotas will therefore not benefit from these reduced tariffs.

As always, there are pro and cons for Malta. This Association Agreement opens a new market for Maltese products and could be an excellent opportunity for Malta to develop a niche exportation market constituted by products under Protected Designation of Origin and high added value products. On the other hand, it also implies more competition on the market for the other Maltese products facing structural problems such as economies of scale and an insularity which increase costs of production.

An agreement was reached on this additional protocol last December and now has to pass through the European Council and the European Parliament before entering into force. In parallel, the future CAP negotiations are currently taking place in Brussels to redefine Maltese agriculture objectives for the coming years.