The Mercosur-European Union Trade Agreement

Luis Balduino
Ambassador of Brazil to Finland

On 28 June 2019, precisely 20 years after the Heads of State and Government of Mercosur and the European Union had launched negotiations for an inter-regional Framework Cooperation Agreement, the two blocs concluded a wider trade agreement considered by all negotiating parts as ambitious, not only for its size, but also for its thematic breadth and political significance. The new framework includes commitments on free trade, rules of origin, sanitary and phytosanitary measures, small and medium-sized enterprises, services, government procurement, intellectual property and sustainable development, creating significant opportunities for sustainable growth on both sides, as some figures point out:

• it sets up a single market of 780 million people and comprising about 25% of the global GDP.
• over 90% of the trade tariffs are to be eliminated after the established transition period.
• beyond trade, the agreement will enhance political dialogue and increase cooperation in areas such as migration, digital economy, research and education, human rights, including the rights of indigenous people, corporate and social responsibility, environment protection, ocean governance, as well as fight against terrorism, money laundering and cybercrime.

The documents comprising the agreement are currently undergoing legal review (“legal scrubbing”). Once this stage is completed, the texts will be ready to be signed and, subsequently, submitted to internal parliamentary approval, which will allow for the ratification of the agreement and its effective entry into force.

Trade in goods between the four Mercosur countries and the European Union reached 88 billion euros in 2021, while trade in services represented 25 billion euros. European companies had a stock of 380 billion euros invested in Mercosur, in 2017. On the other hand, Brazilians had over 150 billion euros in assets in the European Union (2015). Currently, 696 Finnish companies export to Mercosur countries, about 80% of which are small and medium sized. Trade with Mercosur supports about 13,000 jobs in Finland. When the agreement enters into force, these numbers are likely to increase substantially.

Ongoing geopolitical tensions, both in Europe and globally, have raised awareness on the need to rely on trustworthy partners. Mercosur countries are democracies, governed by the rule of law, respectful of human rights and with a long history of peaceful relationship with European countries, with which they have strong historic and cultural ties. In the prevailing uncertainty in international relations, the Mercosur-European Union trade agreement offers a unique potential to create new and better jobs for hundreds of millions of people, cooperate on policies for environment protection and help to provide energy and food security and predictability of trade flows.

References

Apex Brasil. Em que fase está o Acordo Mercosul-União Europeia? Available: https://portal.apexbrasil.com.br/relacoes_comerciais/em-que-fase-esta-o-acordo-mercosul-uniao-europeia/

European Commission. 2019. EU and Mercosur reach agreement on trade. Available: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_3396

European Commission. EU trade relations with Mercosur: Facts, figures and latest developments. Available: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/mercosur_en

Folha de São Paulo. 2022. Guedes diz que Europa retomou interesse em acordo com Mercosul. Available: https://www1.folha.uol.com.br/mercado/2022/04/guedes-diz-que-europa-retomou-interesse-em-acordo-com-mercosul.shtml

SISCOMEX. 2019. Acordo de Associação Mercosul-União Europeia. Available: https://www.gov.br/siscomex/pt-br/acordos-comerciais/mercosul-uniao-europeia

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