Swiss farmers win 517 million francs in Mercosur talks

Swiss farmers have largely secured their demands in the parliamentary debate over the Mercosur free trade agreement, but it remains unclear whether their strategy will succeed in a referendum, SRF reports. The Council of States approved the agreement after the Swiss Farmers’ Union used its support as leverage to obtain substantial financial compensation.

Before the National Council debated the agreement, the Farmers’ Union demanded 880 million francs to offset imports from Brazil, Argentina, Uruguay and Paraguay. When that compensation was not granted, it allowed the agreement to fail in the National Council, knowing that farmers’ votes were decisive.

The move created an alliance between agricultural representatives and left-green politicians, who criticised the agreement for providing insufficient environmental protection. The agreement would have been rejected entirely if the Council of States had also voted against it.

Switzerland is under time pressure because the European Union’s free trade agreement with the Mercosur states entered into force at the beginning of May. Swiss technology companies therefore face a disadvantage compared with competitors in Germany. This pressure helped the Farmers’ Union’s negotiating strategy.

Before the Council of States vote, the union was demanding about 650 million francs. The chamber approved 517 million francs, including 480 million for an investment-loan fund that will provide loans to modernise farms. The money must be repaid.

Proposals from the left to adopt the EU’s deforestation regulation and introduce stricter rules against forced labour were rejected. The amended Mercosur bill, including roughly half a billion francs for farmers, is also expected to pass the National Council. If it does, a referendum is likely.

It is not certain that all farmers, particularly smaller farms, will support the agreement with the South American states at the ballot box. A 2021 referendum on the free trade agreement with Indonesia passed by only 51.6 percent. Environmental groups opposed that agreement because of palm oil, while the Farmers’ Union supported it.

Ongoing trade disputes between the United States and China and between the United States and Canada could nevertheless strengthen support for the Mercosur agreement. Voters may favour additional free trade agreements in response, but it remains unclear whether that argument would prevail over concerns about environmental and labour rights.