The deal could help raise a bilateral fruit and vegetable trade that already stands at close to €1.2 billion annually. 

The European Fresh Produce Association (Freshfel) has outlined several issues for the European Commission (EC) to take into consideration in its upcoming trade negotiations with Mercosur, a trading bloc that includes Brazil, Argentina, Uruguay and Paraguay.

In a recently published position paper, Freshfel highlighted the need for European produce exporters to diversify their international markets in the wake of the Russian embargo, which in the case of Mercosur would require lower tariffs and improved access.

The European Union's fruit and vegetable exports to Mercosur increased almost eight-fold between 2005 and 2015, reaching €185 million with 330,000 metric tons (MT) in volume.

The leading exporting countries include the Netherlands, Spain and Portugal.

"The most important trading partner is Brazil with receiving 98% of all export volumes," Freshfel said in the paper.

Argentina may have the second-largest population in Mercosur, but it only receives a small percentage of the EU's produce exports to the trading bloc. Photo: www.shutterstock.com

The leading produce crops shipped to the market last year included pears (Mercosur is the EU's second-largest pear market), apples, plums, kiwifruit, oranges and stonefruit.

The balance of trade still weighs heavily in favor of Mercosur in the produce arena. While exports have declined by around 30% in value since 2007, they were still more than €1 billion last year with a volume of 880,000MT.

Brazil accounts for 60% of Mercosur's fruit and vegetable exports to the European Union, and the main items shipped from the bloc include lemons, melons, apples and pears, garlic, table grapes and other exotics.

"It is worth reminding that in case of fresh fruit and vegetables, Mercosur and the EU are complementary given seasonality," Freshfel said.

"The respective assortment of the two partners could help sustaining a permanent supply of fresh produce throughout the year for the benefit of consumers on both sides."

Freshfel sees great benefit in a deal that would essentially make the four Mercosur countries act as one bloc when it comes to tariffs and phytosanitary measures. However, the group urges the commission to not only address the abolishment of import tariffs but also take additional tariffs into account.

For example, even though Brazil's tariff rate for EU priority products are relatively low, the country charges a contribution for Social Integration Programmes as well as a Tax on Circulation of Goods and Services, taking the tariff burden to 19% in total.

Freshfel added how Argentina's tariff policy has been repeatedly used in the past to counterweight internal economic fluctuation on the back of third-country exporters.

"While tariff barriers for EU fresh produce should be dismantled for export to Mercosur countries, it will be appropriate to also review the EU tariffs for import of fresh fruit and vegetables which are currently in an unlevelled playing field with other Southern Hemisphere suppliers which already enjoy an FTA (Chile, Peru, South Africa).

"This is particularly relevant for stone fruit, citrus fruit or fresh table grapes - a situation which was recently aggravated by the loss of the GSP (Generalized System of Preferences) status for the Mercosur countries.

But the biggest and most costly issue for EU produce exports to Mercosur countries is access.

"The biggest and most costly problem concerns phytosanitary measures. The European Union operates with an open plant import system, which allows Mercosur countries to import into EU member states as long they comply with plant health directive 2000/29," Freshfel said.

"EU exporters meanwhile will have to instruct their national plant protection authorities to negotiate bilateral protocols for each commodity with the respective national plant protection office of the destination concerned.

"The harmonization of all four systems towards one common approval system should be the outmost priority to tackle."

According to the EC, Mercosur is the EU's leading export market for fertilizers, and is also an important destination for other inputs including chemicals (7th) and machinery (8th). In terms of specific crops, it is the number one export market for the EU's onions and garlic, second in potatoes and pears, and third in olive oil.

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