EU Agrees Largest Ever Trade Deal, With Mercosur Bloc
The EU and Mercosur have reached a political agreement on a new trade agreement that will save EU businesses an estimated EUR4bn (USD4.5bn) worth of duties a year.
The new trade framework forms part of a wider Association Agreement between the two regions. The Mercosur bloc comprises Argentina, Brazil, Paraguay, and Uruguay. The EU is the first major partner to reach a trade deal with the bloc.
The agreement will, over time, remove duties on 91 percent of goods that EU companies export to Mercosur. The EU said that the industrial and agri-food sectors currently face high and sometimes prohibitive tariffs, including on cars (tariff of 35 percent), chemicals (up to 18 percent), clothing and footwear (35 percent), chocolates and confectionary (20 percent), wines (27 percent), and soft drinks (20 to 35 percent).
The agreement will also provide duty-free access subject to quotas for EU dairy products, which are currently subject to a 28 percent tariff.
European Commission President Jean-Claude Juncker said: "Through this trade pact, Mercosur countries have decided to open up their markets to the EU. This is obviously great news for companies, workers, and the economy on both sides of the Atlantic, saving over EUR4bn worth of duties per year. This makes it the largest trade agreement the EU has ever concluded."
Both sides will now perform a legal revision of the agreed text to reach the final version of the Association Agreement and all its trade aspects. The European Commission will translate the text into all official EU languages and submit the Association Agreement to EU member states and the European Parliament for approval.
EU-Mercosur trade is currently worth EUR88bn a year in goods and EUR34bn a year in services. The EU exports to Mercosur goods worth EUR45bn a year and imports Mercosur products worth EUR43bn.
Current trade relations between the EU and Mercosur are governed by an inter-regional Framework Cooperation Agreement, which entered into force in 1999. The EU and individual Mercosur countries also have bilateral Framework Cooperation Agreements, which likewise establish a structure for dealing with trade-related matters. Venezuela has been a member of Mercosur since 2012 and is an observer in, but not a party to, the trade negotiations.
Talks on a free trade agreement began in May 2010 and were paused in 2012. Formal talks resumed in October 2016.
Source: Pride Partners International