EU-MERCOSUR Free Trade Agreement Approved: A Boost for European Exports and Trade Diversification

Strategic Insights -

The European Commission has officially approved the EU-MERCOSUR Free Trade Agreement, marking the end of a two-decade-long negotiation process. The deal, aimed at diversifying European trade partners, will create a massive free trade area with approximately 700 million consumers. The agreement will benefit MERCOSUR countries, particularly in agriculture, with reduced tariffs on exports such as meat, sugar, and soybeans to the European market.

Key Takeaways:

  • The EU-MERCOSUR Free Trade Agreement will create one of the world's largest free trade areas, with approximately 700 million consumers.
  • The deal will benefit MERCOSUR countries, particularly in agriculture, with reduced tariffs on exports such as meat, sugar, and soybeans to the European market.
  • The EC estimates that the deal will save European exporters more than 4 billion euros in tariffs each year, and boost the EU's annual exports to MERCOSUR as much as 39%, equivalent to 49 billion euros.
  • The agreement will give the EU a significant advantage over competitors, allowing it to address risks in its economic relations with the US and China through trade diversification.
  • Opposition from France and Poland may delay the agreement's ratification, but most EU countries support the deal.
  • The EC plans to add legal wording to the MERCOSUR agreement to protect 'sensitive European products' and ease farmers' concerns.

Statistics:

  • The EU-MERCOSUR deal will cover approximately 700 million consumers.
  • The EC estimates that the deal will save European exporters more than 4 billion euros in tariffs each year.
  • The agreement will boost the EU's annual exports to MERCOSUR as much as 39%, equivalent to 49 billion euros.
  • Trade between the EU and MERCOSUR countries is estimated to be worth 4.8 billion euros in 2022.