28 June 2019, Brussels: EU Commission President Jean-Claude Juncker announced the hitherto EU’s largest trade agreement vis-à-vis Mercosur, that was immediately labelled by Brazil’s President Jair Bolsonaro as “historic” and “one of the most important trade deals of all time”.
Mercosur consists of Argentina, Brazil, Uruguay and Paraguay. Venezuela is likewise a member yet it was suspended in 2016 for failing to meet the group’s basic democratic standards.
This agreement aims to reduce, or remove entirely trade tariffs, making imported products cheaper for consumers whilst also boosting exports for companies on both sides. It is set to create a market for goods and services covering nearly 800 million consumers, making it the largest in the world in terms of population.
The two parties began negotiating in 1999, however, negotiations accelerated after US President Donald Trump‘s election in 2016. As a result EU-US talks were frozen.
Already the EU has concluded trade agreements with Canada, Mexico and Japan within the last few years. Nevertheless, the EU agreement with Mercosur could see savings on tariffs that are four times as big as those made in the Nipponese deal, EU Trade Commissioner Cecilia Malmström pointed out in a statement.
By far the EU is Mercosur’s most prominent trade and investment partner as well as its second largest for trade in goods.
The EU wants to increase access for firms that make industrial products and cars – which are currently subject to tariffs of up to 35% – and furthermore enable them to compete for public contracts in Mercosur countries.
On the other side, Mercosur wishes to increase exports of beef, sugar, poultry and other farm products.
In a statement, Brazil highlighted that the trade agreement included eliminating tariffs on products such as orange juice, instant coffee and fruit, whereas producers of other products such as meat, sugar and ethanol would have greater access to the EU market through quotas.
Currently, Argentina under President Mauricio Macri holds the chairmanship pro tempore of Mercosur.
For further information Mercosur: https://www.mercosur.int/documento/mercosur-ue/
