The Blind Spot of Free Trade Agreements: The Making of a Monopolistic Rent. Analytical Mapping of the Instrumentalization of the EU-Mercosur Agreement by the JBS Group

1 – The General Strategic Framework: The Making of a Transnational Monopolistic Rent

The interim Trade Agreement between the European Union and Mercosur (iTA), signed in Asunción on January 17, 2026, and provisionally applied on May 1, 2026, was presented by the European Commission and by officials from both blocs as an instrument for regional cooperation, joint promotion of sustainable development, and diversification of supply chains in the face of Sino-American tensions. This official presentation, relayed by most European economic media and supported by several European heads of government, including German Chancellor Friedrich Merz, constitutes what the School of Economic Warfare’s corpus theorizes as passive cognitive encirclement – the moralization of trade and whitewashing of market conquest ambitions through a narrative veil that conceals the true strategic nature of the mechanism[1][2][3].

Beneath this narrative veil, the iTA mechanism actually orchestrates a sophisticated operation to capture monopolistic rent for the benefit of a single foreign operator, the Brazilian JBS group – the world leader in meat with 2025 revenues of $86.2 billion, or approximately €76 billion depending on the conversion rate used, and around 250,000 employees across 15 countries. This operation is made possible by a procedural mechanism unprecedented in the history of trade agreements concluded by the European Union: the introduction of an allocation mechanism on the Mercosur side and an exporter-side certification, analyzed here as a transfer of effective control over preferential access to tariff quotas, formalized by Commission Implementing Regulation (EU) 2026/888 of April 20, 2026[4][5].

Three structural characteristics define this mechanism. The first is procedural inversion: where the autonomous European model relied on issuing import licenses to European operators free to choose their suppliers, the iTA mechanism introduces, via the digital certificate of Article 3-30 mandatory from 2028, a mechanism by which the foreign exporter holds the authorization conditioning access to the preferential tariff. This inversion transforms the European importer into a captive commercial agent of a single supplier pre-designated by the authorities of the exporting country.

The second characteristic is Brazilian state pre-allocation: the criteria for quota allocation – past exports, sanitary approvals, logistical capacities – mechanically pre-designate the dominant Brazilian operator without this designation ever being explicitly formulated.

The third characteristic is the practical neutralization of the 15% per operator ceiling – a classic European non-concentration rule that becomes inoperative once European importers, forced to source from a single supplier, can no longer disperse flows by diversifying their sources.

The combined effect of these three characteristics could, in the concentration scenario feared by the FIA and echoed by several stakeholders consulted, lead to the capture of 80 to 85% of Brazilian quotas by the JBS group alone. The annual rent capturable by JBS in this working scenario for the three main meat quotas – beef, poultry, pork – ranges from a consolidated €300 million to €870 million annually[6], with a central estimate around €730 million per year. Over the decade 2026-2035, the cumulative scenario including out-of-quota flows and the effect of multi-year consolidation constitutes a prospective hypothesis between €5 billion and €10 billion.

This quantitative stake fully justifies the strategic attention paid to this matter. By way of comparison, the projected rent transfer to a single foreign operator represents between 0.5% and 1.5% of the European Common Agricultural Policy’s annual budget – €56 billion in 2025 – in a logic of capture by a non-European actor not covered by the political and environmental conditionalities applied to European CAP beneficiaries.

2 – The Technical Anatomy of the iTA Mechanism and Rent Quantification

The technical anatomy of the mechanism articulates three rent-generating mechanisms whose systemic coherence ensures the overall capture effect.

The first mechanism is the allocative delegation to the Mercosur bloc introduced by Implementing Regulation (EU) 2026/888. Under the autonomous European model historically applied in all previous Union trade agreements, quota allocation fell under European competence. The iTA mechanism shatters this model by transferring this competence to the Mercosur bloc, which distributes it among its members, who then distribute it to their national exporters according to seemingly neutral criteria – past exports, sanitary approvals, logistical capacities – which mechanically pre-designate the dominant operator. As Jean-Luc Demarty[7] highlighted, this mechanism is unprecedented in the history of European trade agreements. This characterization, formulated by the person who served as Director-General for Trade of the Commission for most of the negotiation period, deserves to be taken seriously.

The second mechanism is the digital certificate of Article 3-30 which will become mandatory from 2028 for all quotas. This certificate, presented by the Commission as a banal administrative modernization, is in reality a paradigmatic case of economic maskirovka. It operates a complete procedural inversion: where the European importer held the license allowing access to the reduced tariff and freely chose their supplier, it is now the foreign exporter who holds the certificate allowing access to the reduced tariff, which transforms the European importer into a captive commercial agent. This inversion constitutes the procedural lock of the mechanism.

The third mechanism is the practical neutralization of the 15% per operator ceiling. This classic European rule, which guaranteed non-concentration of quotas by stipulating that no importing company could appropriate more than 15% of the annual flow, is not formally abolished by Regulation 2026/888. It is practically neutralized by the combined effect of the two preceding mechanisms: all European importers being forced to source from the same dominant operator holding the Article 3-30 certificate, the ceiling no longer produces any dispersion effect on the origin of the flow.

The quantification of the capturable rent by JBS on the three main meat quotas is established as follows, by applying the inverted Krueger model to triangulated sectoral parameters.

This estimate is consistent with the total exposed value of €2.87 billion published by the French interprofessional front on September 4, 2025, and with the converging statements by Thierry Pouch and David Le Manour[9] mentioning stakes of several hundred million euros per year. Over the decade 2026-2035, the cumulative estimate including out-of-quota flows and the effect of multi-year consolidation should be read as a prospective scenario of €5 billion to €10 billion[10].

The iTA mechanism is tactically characterized as an indirect strategy of attrition operating in three coherent phases. The establishment phase (2026-2028) will see the capture of quotas and the building of commercial positions with gradual ramp-up. The attrition phase (2028-2032) will see the progressive erosion of European producers’ margins by setting prices just below the European market price. The consolidation phase (2032-2035) will see the extension of positions beyond quotas and the acquisition of weakened European assets – in a logic precisely analogous to that empirically observed with the MHP group.

3 – The Material Mapping of JBS: Six Levels Articulated into a Systemic Mechanism

The JBS mechanism is embodied in a material architecture articulating six distinct operational levels whose internal coherence ensures overall effectiveness. This architecture, built through successive sedimentations over twenty-five years, exhibits an operational maturity that makes the effective capture of iTA rent highly probable and forms the basis for the expansion trajectory through acquisitions identified for the 2032-2035 horizon.

The capital level 1 articulates four tiers: the Batista family at the top (founders in 1953), J&F Investimentos S.A. in Brazil and J&F Investments Luxembourg S.à r.l. (RCS B276177) as controlling holdings, JBS N.V. in the Netherlands as a holding company dually listed on the New York Stock Exchange (NYSE, ticker JBS) and the São Paulo Stock Exchange (B3, BDR ticker JBSS32) since June 12, 2025[11], and jurisdictional sub-holdings. The Class A / Class B mechanism guarantees the Batista family 85% of voting rights post-IPO, a configuration that ensures doctrinal continuity and alignment with Brazilian state capitalism historically materialized by BNDES support – 9 billion reals injected between 2004 and 2016.

The offshore financial level 2 deploys a network articulating five jurisdictions, documented by the SOMO report of April 2025[12]. Luxembourg constitutes the central hub with seventeen entities, sixteen of which have no declared employees, owning approximately $58 billion in assets. Malta-Luxembourg flows in 2022 – $10.77 billion in intra-group loans at 0% interest – ramifications in Bermuda – $732 million documented via Rabobank between 2019 and 2022 – in Austria (JBS Investments GmbH) and Delaware (JBS USA Food Company paying approximately $200 million in annual interest to Luxembourg) complete the mechanism. Cumulative tax avoidance for 2019-2022 is documented between $221 million and $442 million, with an effective tax rate for Luxembourg entities estimated by SOMO at 0.02% – a configuration that gives JBS a structural tax competitive advantage over competing European operators.

The European industrial level 3 has been built through successive sedimentations over fifteen years. Pilgrim’s Europe – consolidated in April 2025, £4.2 billion in revenue, 20,000 employees, 40 sites – integrates Moy Park (acquired in September 2015 for €1.32 billion), Pilgrim’s UK (formerly Tulip, acquired in 2019), and Pilgrim’s Food Masters (formerly Kerry Foods, acquired in September 2021 for approximately €819 million). Moy Park France SAS – RCS Arras 444 575 120, sites in Hénin-Beaumont, Marquise, Orléans, 700 to 800 employees – constitutes the French anchor. The Vegetarian Butcher Collective in the Netherlands brings together Vivera (acquired in April 2021 for €341 million) and De Vegetarische Slager (acquired in September 2025 from Unilever). The Italian hub – Rigamonti, King’s, Principe – and BioTech Foods in Spain, which operates the world’s largest cellular meat factory operational since 2024, complete the multi-protein coverage.

The trading level 4 articulates JBS Global UK Ltd – Companies House number 04285339, approximately £1 billion in revenue – and JBS Toledo NV, headquartered in Ghent, Belgium. These two vectors ensure the completion of the mechanism by eliminating dependence on third-party intermediaries and allowing JBS to be simultaneously an exporter from Brazil under quota and an importer in Europe.

The logistics level 5 articulates the hubs of Rotterdam – Europe’s largest port, absorbing approximately 61% of European imports of Brazilian poultry – Antwerp – operational proximity to JBS Toledo NV – and Le Havre as the French gateway.

The downstream commercial level 6 mobilizes large retailers (Carrefour, Tesco, ASDA, Sainsbury’s, Edeka, Rewe), commercial catering (McDonald’s, Burger King via De Vegetarische Slager), and private labels (Pilgrim’s, Moy Park, Vivera, De Vegetarische Slager, Rigamonti).

4 – Dynamic Sectoral Reading: Four Sectors, Four Strategies

The mapping of the mechanism is calibrated differently according to the sectors concerned, in a logic of coherent multi-segment coverage.

The beef sector employs a qualitative segmentation strategy targeting high-end segments – beef breeds, aged meats, commercial catering – where the tariff differential, ranging from 7.5% to 50%, creates a maximum price advantage. JBS Toledo NV in Ghent constitutes the operational pivot for European beef flows. The annual capturable rent of €297 million to €463 million targets segments where the net unit differential is maximal – €5,000 to €6,500 per ton for high-end products – maximizing rent beyond what proportional distribution would allow.

The poultry sector employs a strategy of amplifying pre-existing dependence. The French self-sufficiency rate for chicken, which fell from 157.6% in 2000 to 80.9% in 2024[13], indicates a productive collapse already underway. Additional iTA flows – 144,000 to 153,000 tons annually – will add to the existing 850,000 tons of imports: an increase of 17% to 18% in European imported volume. Downstream integration by Pilgrim’s Europe allows for neutralizing consumer concerns related to Brazilian origin through local processing in European units marketed under established European brands. This sector constitutes the segment where the analogy with the Ukrainian MHP precedent is the most direct and best documented.

The pork sector employs a downstream industrial consolidation strategy different from the previous two. The European self-sufficiency rate for pork stands at around 122% – a configuration distinct from other sectors. The direct capturable rent on quotas is modest – €12 million to €23 million per year – but the total capturable rent across the entire pork mechanism, integrating margins on European industrial activities via Pilgrim’s UK and Pilgrim’s Food Masters, could reach €100 million to €200 million annually. This sector primarily serves as a lever for downstream industrial consolidation rather than direct rent capture.

The alternative proteins mobilize a transversal strategic coverage logic. The Vegetarian Butcher Collective – Vivera and De Vegetarische Slager – and BioTech Foods, which operates cellular meat, provide coverage for possible societal developments: if trends favor alternative proteins, JBS holds a dominant position in the alternative segment; if inverse trends prevail, JBS benefits from its dominant position in the conventional segment via iTA quotas. This dual coverage constitutes remarkable strategic hedging and demonstrates the sophistication of the group’s strategic management.

5 – A Particular Relationship with Law and a Loaded Jurisdictional Past

It is appropriate to present, from an integrative perspective, the trans-jurisdictional judicial record of Joesley and Wesley Batista – reference shareholders of J&F Investimentos S.A., the ultimate family holding of the JBS structure prior to the Dutch restructuring consecrated by the IPO of June 12, 2025 – focusing on four jurisdictions selected for their systemic scope with regard to the group’s capital, financial, and operational architecture: Brazil, Argentina, the United States, and the European Union.

This comparative mapping reveals a consistent litigation matrix over the 2016-2023 period, whose transactional extinction now paradoxically produces a reputational cleansing effect that secures the foreseeable instrumentalization of the EU-Mercosur association agreement, which entered into provisional application on May 1, 2026.

Brazil constitutes the original matrix. The converging federal investigations – Operações Carne Fraca, Lava Jato in its agro-industrial component, Greenfield, Cui Bono, and Patmos – led, on May 31, 2017, to an acordo de leniência of a historic amount of 10.3 billion reals (approximately $3.24 billion), approved by the Federal Supreme Court on May 18, 2017, admitting the payment, over fourteen years, of bribes to approximately 1,829 political officials totaling $123 million; the insider trading component, which resulted in six months of pre-trial detention for the two brothers starting September 10, 2017, concluded with a definitive acquittal by the Comissão de Valores Mobiliários on October 31, 2023.

The United States, through the combined settlement of October 14, 2020 (DOJ Brooklyn, SEC Washington, DOJ Antitrust Colorado), imposed a cumulative penalty of approximately $394 million – J&F Investimentos pleading guilty to conspiracy to violate the Foreign Corrupt Practices Act, the SEC obtaining $27 million in disgorgement and a civil penalty of $550,000 imposed on each of the two brothers, and the Pilgrim’s Pride Corporation subsidiary admitting to a charge of prohibited agreement in the broiler chicken market under Sherman Antitrust Act § 1 – without any divestiture of American assets being imposed on the group, which confirms the strictly pecuniary nature of the sanction.

Argentina, in the absence of any autonomous criminal indictment, presents derivative litigation of remarkable strategic density, articulated around BNDES financing for the Swift-Armour acquisition (2005) and the judicial suspension, in June 2017, by the 10th Federal Court of Brasilia, of the projected sale to Minerva Foods of the group’s South American assets – demonstrating the Brazil-Mercosur procedural embeddedness of JBS assets.

The European Union, unlike the three preceding jurisdictions, does not record, as of the date of writing, any direct criminal indictment intuitu personae: its litigation unfolds according to an indirect and systemic logic articulated across three distinct channels – judicialization by financial intermediaries (Sherpa complaint of November 8, 2023, targeting, before the National Financial Prosecutor’s Office, BNP Paribas, Crédit Agricole, BPCE, and AXA on the basis of articles 324-1 and 321-1 of the penal code); sanction by organized distribution (coordinated withdrawal in December 2021 by Lidl Netherlands, Albert Heijn, Auchan France, Carrefour Belgium, Sainsbury’s UK, and Princes Group); emergence of a prospective normative arsenal (RDUE, CSDDD, FSR, CSRD) supported by the SOMO documentary work of April 2025 on the Luxembourg architecture.

Three structuring observations emerge from this comparative analysis.

Firstly, the Batista brothers’ past, considered in its trans-jurisdictionality, does not constitute a punctual anomaly but outlines the signature of conquest capitalism supported by massive public corruptive flows (BNDES, Caixa, Petros) and a methodical instrumentalization of normative asymmetries between jurisdictions.

Secondly, the European procedural asymmetry – fragmentation of judicial competences among Member States, absence of a European Public Prosecutor’s Office competent in environmental and economic matters beyond fraud against the Union’s financial interests, instrumentalization by JBS of normative forum shopping via the Luxembourg-Dutch architecture – constitutes precisely the systemic condition for the anticipated rent capture under the regime resulting from the Council’s implementing act of April 20, 2026.

Lastly, the definitive nature of the Brazilian acquittals of 2023 and the negotiated extinction of the American prosecutions of 2020 now paradoxically produce a reputational cleansing effect that legally secures the foreseeable instrumentalization of the EU-Mercosur agreement.

This is precisely the strategic blind spot identified by the School of Thought on Economic Warfare in its note of April 17, 2026 – a zone that France, Ireland, Poland, and Hungary must now highlight within the framework of the ratification procedure initiated before the European Parliament and the pending referral to the Court of Justice of the European Union.

6 – The Structured Comparison JBS / MHP: From Prototype to Continental Industrial Version

The Ukrainian MHP precedent, which captured over 90% of European Ukrainian poultry quotas for eight years (2017-2026) under the EU-Ukraine DCFTA regime and benefited from nearly €400 million from the EBRD[14], constitutes the empirically documented prototype of the monopolistic capture model by a foreign operator supported by state capitalism. The JBS-Mercosur mechanism constitutes its continental industrial version, on a considerably larger scale.

The comparative analysis across ten parameters – institutional context, economic mass, capital structure, relationship with political power, capture mechanism, capture rate, expansion trajectory through acquisitions, financial architecture, sectoral profile, cognitive dimension – allows for the identification of five structural invariants that recur from one case to another and constitute the generic characteristics of the capture model.

First invariant: integration into state capitalism which allows operators access to or provides them with substantial financial – EBRD for MHP, BNDES for JBS – diplomatic, and political support.

Second invariant: ultimate family control via offshore holding – Kosyuk via Cyprus for MHP, Batista family via Luxembourg for JBS – which ensures the doctrinal continuity of the mechanism.

Third invariant: dominant position in the exporting country’s domestic market – MHP’s dominant position in the Ukrainian poultry sector – around 53% to 54% of production or the domestic market according to some recent data, with a much higher share in certain export flows to the European Union; dominant position in Brazilian export segments for JBS.

Fourth invariant: expansion trajectory through acquisitions financed by captured rent – Perutnina Ptuj 2021, Uvesa 2024 for MHP; nine cumulative acquisitions 2009-2025 for JBS, projected consolidation 2032-2035.

Fifth invariant: European cognitive blindness architecture – eight years of blindness before awareness for MHP, open cognitive window for JBS.

The comparative analysis also allows for the identification of four axes of structural surpassing achieved by JBS compared to the MHP model. JBS represents approximately 26 times the economic mass of MHP – €76 billion versus €2.9 billion – with a geographical presence three times wider – 15 countries versus 5 – and a workforce nine times larger – 250,000 versus 28,000. The procedural capture mobilized by JBS under the iTA constitutes a qualitative leap compared to MHP’s economic dominance without procedural capture under the DCFTA. JBS’s multi-protein diversification – beef, poultry, pork, alternatives – surpasses MHP’s mono-segment poultry profile. The architectural sophistication of the JBS mechanism – five offshore jurisdictions, seventeen Luxembourg entities, six articulated levels – substantially exceeds that observed for MHP.

This qualification of structural surpassing has a major operational implication: the European cognitive window, which opened on the MHP precedent with a ten-year delay, must close more quickly for JBS if the objective is to prevent the European industrial consolidation projected for the 2032-2035 horizon.

7 – Institutional Sequencing and Chronology of Decisive Acts

Strategic understanding of the mechanism requires mastery of the chronology of decisive acts over the September 2025 – May 2026 period, which reveals a logical temporal sequence consistent with Coutau-Bégarie’s analysis of the indirect strategy of attrition.

On September 3, 2025, the European Commission presented the finalized version of the agreement by choosing the commercial-political splitting – a procedural decision that allows the commercial component to be submitted to qualified majority voting in the Council and to the European Parliament alone, without intervention from national parliaments.

On September 4, 2025, the French interprofessional front published its communiqué establishing the exposed value at €2.87 billion.

On November 27, 2025, JBS representatives were received at the Élysée in a meeting devoid of substantial media coverage[15] – a signal of less French institutional vigilance than suggested by the formal opposition position adopted six weeks later in the Council.

On January 9, 2026, the Council adopted the decision to sign by qualified majority, despite opposition from France, Ireland, Poland, Hungary, and Austria – blocking minority not reached.

On January 17, 2026, the iTA was signed in Asunción in a ceremony presented as historic.

On January 21, 2026, the European Parliament voted by 334 votes to 324 with 11 abstentions on a resolution referring to the Court of Justice of the European Union a request for an opinion on the conformity of the iTA with the treaties – a close vote with major political significance.

On April 17, 2026, three days before the adoption of the implementing regulation, the School of Thought on Economic Warfare published on its website the article EU-Mercosur: Anatomy of a Strategic Blind Spot[16], which formulated in operational terms the most complete strategic analytical framework available on the eve of the implementing act. The article explicitly named JBS as the pivot of a meat cartel operating as the armed wing of Brazilian economic warfare, identified three available corrective levers not seized by European actors – moral, judicial and normative, cognitive – and formulated the strategic warning that when a country or a sector fails to defend its market over time, others do it in its place, and against it.

On April 20, 2026, eleven days before provisional application and three months after the CJEU referral, the Commission adopted Implementing Regulation (EU) 2026/888 setting out the technical modalities for quota application, published in the Official Journal on April 21.

On April 23, 2026, Belgian MEP Benoît Cassart sent a letter to Commissioners Christophe Hansen and Wopke Hoekstra explicitly naming JBS as the probable target of the capture[17].

On April 24, 2026, the Cassart letter was publicly disseminated.

On April 24, 2026, Géraldine Woessner’s investigation published in Le Point factually documented the mechanism. [18]

On April 28, 2026, Agence Europe reported in Daily Bulletin Europe No. 13857 the first official institutional response to the alerts of the preceding weeks: European Commissioner for Agriculture Christophe Hansen, the main recipient of the Cassart letter of April 23, affirmed that the European Union retains exclusive authority over the management of tariff quotas.

On May 1, 2026, the iTA entered into provisional application.

The sequence follows a coherent strategic logic. The implementing act would probably not have crossed the political threshold if it had been adopted before the CJEU referral, which could have integrated the challenge. By adopting it after the referral, the European negotiator secured its technical architecture while knowing that the Court’s opinion would not specifically address this mechanism – the referral of January 21, 2026, primarily targeting the commercial-political division. This temporal asymmetry between referral and implementing act constitutes a textbook case of what Lucien Poirier called in Stratégie théorique the decoupling maneuver[19] – an operation consisting of removing a particular mechanism from the scope of a challenge procedure by exploiting procedural delays and perimeters[20].

8 – Conclusion: Signal, Equip, Mobilize

The cartographic analysis presented in the full report produces three distinct operational functions that constitute its overall strategic contribution.

First function: signal. Beyond its appearance of ritualized regional cooperation, the iTA mechanism constitutes a sophisticated operation to capture monopolistic rent for the benefit of a foreign operator supported by state capitalism. This signaling, supported by the triangulation of mobilized theoretical corpuses and systematic factual documentation, is the indispensable prerequisite for any subsequent institutional mobilization. As long as the mechanism is not perceived for what it is, no corrective lever – and they exist in positive European law – can be effectively mobilized. The report contributes to undoing strategic invisibilization and achieving cognitive rearmament.

Second function: equip. The articulation between the five-axis analytical matrix – doctrine, legal architecture, actor, allocative mechanism, European reception – and the six-level material mapping – capital, offshore finance, industrial, trading, logistics, commercial – provides the complete analytical framework enabling European decision-makers, interprofessional stakeholders, parliamentary coalitions, and national legal actors to identify the points of application for available corrective levers. The structural invariants of the capture model identified in the JBS / MHP comparison provide the generic characteristics susceptible to replication in other trade agreements, which justifies extended institutional vigilance beyond the iTA case alone.

Third function: mobilize. The prospective trajectory projected for the 2026-2035 horizon, articulating establishment, attrition, and consolidation phases, generates a substantial strategic signal that calls for coordinated mobilization of European actors. The projected cumulative rent – €5 billion to €10 billion in the ten-year prospective scenario – the trajectory of productive collapse in the most exposed sectors – French chicken self-sufficiency rate likely to fall below 60% by 2035 – and the prospect of European acquisitions by JBS in the 2032-2035 consolidation phase constitute the three main components of this signal. The European cognitive window, shorter than that observed for MHP due to the learning effect from the Ukrainian precedent, conditions the possibility of preventing the most unfavorable scenarios.

The final stake goes beyond the iTA file alone. It concerns the European Union’s capacity to preserve, in the contemporary context of deep post-1995 integration, its commercial, food, capital, and cognitive decision-making capacity in the face of conquest capitalism operations led by developing states equipped with national champions supported by their public development banks. This capacity will only be rebuilt on condition of reconstituting the analytical tools that orthodox European commercial doctrine, structurally disarmed since the end of the Cold War, no longer provides. The report contributes to this reconstitution by explicitly mobilizing, in direct lineage, the concepts that make cognitively accessible what collective blindness renders invisible.

Rigorous analysis precedes effective political action. This precedence is logical, and it constitutes, in the contemporary conditions of economic warfare, the very condition for the possibility of action.

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