Swiss Senate revives Mercosur trade deal despite farming backlash

The Council of States voted 35 to seven on September 15, reviving a trade deal that the House of Representatives rejected only months ago. The decision sends the EFTA-Mercosur agreement back to the National Council, where farmers and left-wing parties previously assembled enough opposition to stop it.

The Senate paired approval with CHF517 million for Swiss agriculture from 2028 to 2033. That sum is designed to make the agreement politically viable after farmers demanded substantially more support. Their proposal called for CHF880 million between 2028 and 2035, a figure the Senate rejected.

The vote places agricultural protection, foreign trade and environmental standards back at the centre of the autumn parliamentary session. The agreement would lower tariffs for Swiss exporters and open new commercial opportunities in Argentina, Brazil, Paraguay and Uruguay. It would also increase quotas for selected South American imports, including meat and wine.

The National Council must now revisit the treaty. Its earlier rejection followed a campaign by agricultural groups and a left-wing bloc that objected to the failure of proposals targeting deforestation and forced labour. The Senate rejected those proposals again on Monday, preserving the deal’s most contested terms.

The approved agriculture package falls CHF363 million short of the farming sector’s demand. The gap explains why the compromise remains vulnerable when the National Council takes up the agreement again.

Farmers fear that additional imports from South America will put pressure on domestic producers already dealing with tight margins and high production costs. The treaty would require Switzerland to admit South American quotas, bringing more meat and wine from the Mercosur bloc into the Swiss market. Producers have argued that cheaper imports could weaken the value of Swiss output, which carries higher costs and must meet the country’s strict production rules.

Economics Minister Guy Parmelin rejects a direct link between the agreement and agriculture’s current difficulties. He says the deal will also improve conditions for Swiss agricultural exports, alongside opportunities for other sectors. That argument has not resolved the dispute over import competition or the scale of compensation.

The funding approved by the Senate covers six years, while the farmers’ proposal covered eight. The difference concerns both the size and the duration of state support. Parliament must decide whether that package offers enough protection to secure approval without creating a larger long-term burden for the federal budget.

Swiss exporters could save CHF150 million a year in customs duties under the agreement. The treaty, concluded by EFTA and Mercosur in 2025, would give Swiss companies more favourable access to the South American bloc’s markets.

The projected savings are a central argument for ratification. Switzerland’s pharmaceutical, machinery, food and other export industries already depend heavily on predictable market access. Lower tariffs could reduce costs for firms selling into Argentina, Brazil, Paraguay and Uruguay, although the sources do not provide a sector-by-sector forecast of the gains.

The concessions run in both directions. Switzerland would accept additional import quotas, particularly for meat and wine. Those provisions have made the treaty a domestic agricultural issue rather than a distant foreign policy measure. Swiss consumers could see a wider range of imported products, while producers worry about competition from countries with different cost structures and regulatory systems.

Environmental safeguards remain a separate fault line. Left-wing lawmakers voted against the agreement after their proposals on deforestation and forced labour failed. The Senate rejected the same measures during its latest deliberation. Parmelin has said the deal will not increase trade connected to deforestation, a reassurance opponents continue to challenge politically.

The National Council now holds the deal’s immediate fate after rejecting it narrowly in June. Its decision will test whether the Senate’s funding compromise can win over farmers’ representatives and whether the left will maintain its opposition over labour and environmental safeguards.

The vote comes during an autumn session already crowded with contentious questions, including the package of agreements between Switzerland and the European Union and plans for army financing. Mercosur will add another major test of the governing coalition’s ability to balance export interests with domestic pressure.

Approval in the National Council would clear a significant parliamentary hurdle, though the political dispute would continue beyond the chamber. Farmers’ organisations have already demonstrated their capacity to mobilise against the treaty, while environmental groups are likely to keep pressing for binding action on deforestation and forced labour in supply chains.

For Swiss households, the agreement’s effects would emerge through trade flows, business access and the agricultural market. The treaty promises tariff savings for exporters and sets import quotas that may alter competition in selected food categories. Parliament’s next vote will determine whether those gains outweigh the political cost of the current compromise.