How will the agreement between the Mercosur countries and Europe affect Polish companies?

Key information:

• The Mercosur-EU agreement opens the trade market between Europe and Brazil, Argentina, Paraguay and Uruguay.
• Opportunities for Polish companies are the sector to develop exports of machinery, tools, dairy products.
• Threats are mainly the influx of cheaper agricultural products with lower standards.
• Key sectors vulnerable to change are agriculture, industry and international trade.
• Poland and France are opponents of the deal because they are concerned about the impact on the domestic agricultural market.
• Germany and Spain are supporters of the agreement due to its positive impact on their exports.

Details below!

The trade agreement between the European Union and the Mercosur countries - Brazil, Argentina, Paraguay and Uruguay - is one of the largest economic agreements in the EU's history. After more than 20 years of negotiations, the agreement calls for the elimination of tariffs on more than 90% of goods, with the aim of increasing trade. For Polish entrepreneurs, this represents both an opportunity and a challenge. In this article, we analyze what effects the Mercosur-EU agreement may have on Polish business and how to prepare for these changes.

This deal is both an opportunity and a threat, and we believe that the most important thing is preparation. Check out our strategic consulting offer and see how we can help your business in an uncertain environment!

Which sectors of the Polish economy will be most affected by the agreement?

Agricultural sector - threats to Polish agriculture

The influx of cheaper agricultural products from Mercosur countries, such as beef, poultry or sugar, could lead to a significant drop in prices in Europe. Polish farms that adhere to strict EU standards may find it difficult to compete on price. Production in Mercosur countries is cheaper because standards there for environmental protection, animal welfare, and use of pesticides and antibiotics are less stringent than in the EU.

Reduced production costs in Mercosur may put pressure on Polish farmers, forcing them to cut costs or abandon production of certain commodities. Farmers may need government support, such as subsidies or special assistance programs, to adapt to the new situation.

In addition, consumers may be tempted by lower prices for imported products, which will reduce demand for local products, even if they are of higher quality. Polish agriculture, especially small and medium-sized farms, may be the most vulnerable to these changes.

Industrial sector - new export opportunities

For Polish industry, the Mercosur-EU agreement opens the new markets, especially in machinery, tools, vehicles and industrial products. Mercosur countries are fast-growing economies with a growing demand for high-quality technological and industrial products. In this context, Polish companies can leverage their experience in the production of agricultural machinery, construction tools or automotive components.

Additionally, Dairy exports to Mercosur may become an opportunity for Polish producers in this sector. Products such as cheese, butter and powdered milk could be attractive in the markets there, where consumers increasingly value European quality standards.

However, despite these opportunities, Polish industrial companies may face Challenges related to price competition and the need to comply with local regulations and technical requirements. Adequate preparation for entry into the Mercosur market, including cooperation with local partners and the use of support from EU institutions, will be key.

Differences in production standards - impact on the competitiveness of Polish products

Mercosur countries are characterized by less stringent regulations on environmental protection, animal welfare and the use of chemicals in agriculture. Production in these countries is often cheaper due to the lack of requirements that are standard in the European Union. For example, Brazil and Argentina use pesticides and antibiotics that are banned in the EU. As a result, production costs in Mercosur countries are lower, which translates into price competitiveness of their products in the European market.

For Polish producers, this means adjusting strategies. While Polish products may be of higher quality and meet stringent standards, their higher prices may be less attractive to consumers. Moreover, the lack of transparency in the origin marking system can mislead consumers, further weakening the position of Polish producers.

Production standards in the EU also include Sustainability requirements, which often increases companies' operating costs. In the long term, however, it is possible that consumers will increasingly appreciate higher quality standards and an ethical approach to production, which could create new market niches for Polish companies.

How can Poland minimize the negative impact of an agreement between Mercosour countries and Europe?

1. Diversify markets and optimize processes

Polish companies should focus on exploring new markets and improving operational efficiency. Exploiting export potential on other continents, including Asia and Africa, may be the answer to increasing competition from Mercosur.

2. Institutional support and funding

The European Union offers various programs to support the international expansion of companies, such as Horizon Europe or COSME. The Polish government can also introduce protective instruments for the most vulnerable sectors, such as through subsidies or educational support for adaptation.

When can the agreement go into effect and what procedures are required?

In order for the agreement to enter into force, it is necessary:

1. Approval by the European Parliament - requires a simple majority vote.
2. EU Council approval - qualified majority, or 15 of 27 countries representing 65% of the EU population.
3. Ratification by all EU member states In accordance with their national procedures.

Current political tensions and resistance from countries such as France and Poland indicate that the process could get much longer.

Mercosour-EU agreement presents both opportunities and threats

The Mercosur-EU agreement can bring both opportunities and threats to Polish business. The key is to prepare for the changes by:

• Exploration of new markets, especially outside the EU.
• Optimize costs and improve production efficiency.
• Use of institutional support and available programs.

Polish companies should follow the legislative process and actively engage in discussions with industry organizations to influence the shape of the final agreement. Strategic preparation will minimize risks and take advantage of the potential benefits of the new trade environment.