EU-Mercosur Free Trade Agreement — Optimism in the Air

By IndraStra Global News Team

By IndraStra Global News Team

The European Union (EU) and Mercosur are "very close" to signing a free-trade agreement which both the parties are discussing since last two decades. João Cravinho, EU Ambassador to Brazil, said he believes the deal should be forged in June or July this year. 

On April 24, 2018, negotiators from both the blocks resumed negotiations which continued till April 27 in Brussels. The negotiators agreeing that in the last year much progress was made and that an agreement is very close. The final details depend on when the two parties will overcome differences in industry, especially in agricultural industry.

Cravinho’s statement comes shortly after the beginning of the 14th edition of the European Week all across Brazil. The event began Wednesday (May 9)—Europe Day. At the same time, Paraguayan Foreign Minister Eladio Loizaga confirmed that he is in contact with his peers to define the date of the meeting that would be in Asunción. Also, he confirmed that he is in talks with his Mercosur colleagues to set a new meeting date with his European counterparts to adjust the final details and finally close the agreement.

On the other hand, Cravinho did not talk about the differences between the proposals made by the EU and Mercosur in great detail. "It’s part of the secret in the business," he said. He did acknowledge, however, that these disparities delay the process of negotiation, as "they make an impact and have a certain value for the European side, as well as the Brazilian side, and the side of Mercosur in general."

The EU is negotiating a trade agreement with the four founding members of Mercosur (Argentina, Brazil, Paraguay, and Uruguay) as part of a bi-regional Association Agreement. Venezuela has been a member of Mercosur since 2012 and is an observer in the trade negotiations. Current trade relations between the EU and Mercosur are based on an Inter-regional Framework Cooperation Agreement which entered into force in 1999.

The signing of the deal was postponed as a result of the reluctance of industrial and agricultural sectors on both sides. The EU, in particular, wants to include maritime issues, access to public tenders and protection of food and drink names such as champagne or Parma ham, which it says can only be used for products made in particular areas. In terms of tariff reduction, it could be the EU’s most lucrative trade deal to date, with the savings potentially three times greater than for deals with Canada and Japan combined. EU is now very much keen to secure yet another market opening, whilst US president Donald Trump heralds in an 'America First' policy of protectionism.

The goal of the new EU-Mercosur trade deal is to:

• Remove these barriers and help EU firms – especially smaller ones – to export more
• Strengthen people's rights at work and environmental protection, encourage companies to act responsibly and uphold high food safety standards
• Protect quality EU food and drink products from imitations.

To learn about the statistics on the four Mercosur countries negotiating with the EU - Click Here

With reporting by Empresa Brasil de Comunicação and Reuters