The EU and five South American countries have reached a blockbuster trade deal that will create a market of 700 million people by cutting tariffs on more than 90% of goods.
European Commission President Ursula von der Leyen and Mercosur leaders finalized the agreement, the largest ever signed, after 25 years of talks at a summit in Uruguay.
The deal was closed after 25 years of talks
“This is a win-win deal, which will bring significant benefits to consumers and businesses, on both sides. We focus on fairness and mutual benefit,” he said.
The signatory states of MERCOSUR – the Republic of Argentina, the Federal Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay – and the European Commission announced, at the 65th MERCOSUR Summit (Montevideo, December 6), the completion of the negotiations of a Partnership Agreement between the two regions, after more than two decades of negotiations.
The joint announcement of the agreement
Taking into account the progress made in the past decades until June 2019, MERCOSUR and the European Commission have been engaged, since 2023, in an intense negotiation process, with the aim of adapting the agreement to the challenges they face at national, regional and global levels level. flat. Over the past two years, both sides have engaged in seven rounds of negotiations, among other meetings, and pledged to review any relevant issue
This agreement comes at a critical time for both sides, presenting opportunities for major mutual gains through enhanced geopolitics, economic cooperation, sustainability and security.
As stated in the official announcement of the said agreement:
- It will strengthen strategic trade and political ties between like-minded and trusted partners.
- It will support economic growth, boost competitiveness and strengthen resilience on both sides by opening trade and investment opportunities and ensuring sustainable access and processing of raw materials.
- It represents an important milestone in the fight against climate change with strong, concrete and measurable commitments to end deforestation.
- It takes into account the interests of all Europeans, including the EU’s extremely important agricultural sector. It will help increase EU agri-food exports while protecting sensitive sectors.
- It adheres to EU animal health and food safety standards, preventing unsafe products from entering our market.
- A boost to EU and Mercosur competitiveness and economic security
This landmark agreement will:
- secure and diversify supply chains
- create new opportunities for all kinds of businesses by removing often prohibitive tariffs on EU exports to Mercosur.
- save EU businesses €4 billion worth of tariffs each year.
- secure commercial valuations in strategic net zero industrial sectors such as renewable energy technologies and low carbon fuels.
- help small and medium-sized enterprises to export more by reducing red tape.
- ensure an efficient, reliable and sustainable flow of raw materials critical to the global green transition.
The proposed EU-Mercosur agreement consists of a political pillar and a cooperation pillar and a trade pillar. The end of the negotiations is the first step in the process of concluding the agreement.
Who are reacting?
The EU-Mercosur agreement will have to be given the go-ahead by EU member states and the European Parliament. A qualified majority is required for Council approval. However, France, Austria and Poland have categorically disagreed with the agreement in question, while, according to the recent words of the Italian Minister of Agriculture, it is not excluded that Rome will also join this front. These four countries represent 35% of the EU’s population and form a blocking minority.
Negotiations for the EU-Mercosur Free Trade Agreement began on 28 June 1999. After the talks were suspended, negotiations resumed in 2010. The long-running negotiations gained new momentum in 2016 and the EU and Mercosur concluded negotiations in 2019. The political agreement concluded in June 2019, was never ratified, due to the reluctance of many countries, including France.
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