EU-Mercosur Association Agreement
In “A Stronger Europe in the World”
Background and state of play
On 28 June 2019, an agreement in principle was reached between the EU and the four founding members of the Common Market of the South (Mercosur) – Argentina, Brazil, Paraguay, and Uruguay – on the trade pillar as part of a wider Association Agreement (AA) including political dialogue and cooperation. The latter part was agreed upon in June 2018. Following the change of government in Brazil in January 2023, the parties agreed on a roadmap for the first half of 2023 to negotiate an additional interpretative instrument as regards the commitments made under the trade and sustainable development (TSD) chapter of the trade pillar.
The FTA has a significant geopolitical relevance and is a strong sign against protectionism and unilateralism. If ratified, the FTA would establish the largest free trade zone the EU has ever created, covering a population of over 780 million, and consolidate the close political, economic and cultural ties between the two regions. Negotiations on the bi-regional AA started in 2000 based on Council negotiating directives of 1999. Currently, EU-Mercosur relations are governed by the 1995 Interregional Framework Cooperation Agreement.
The FTA would eliminate customs duties on 91% of EU goods exports to Mercosur. Mercosur would remove high import duties on industrial products from the EU such as cars, car parts, machinery, chemicals, clothing, pharmaceuticals, leather shoes, and textiles. Import duties on EU food and drink exports such as wine, chocolate, whiskey and other spirits, biscuits, canned peaches and soft drinks would be eliminated progressively. The FTA would also protect about 350 of the EU's geographical indications (GIs) on the Mercosur market. Moreover, the Mercosur countries would open their government procurement market to EU companies. The EU would remove import duties on 92% of Mercosur goods exported to the EU. For sensitive agricultural goods limited tariff rate quotas (TRQs), in-quota duties and long staging periods as well as a safeguard instrument have been incorporated. The FTA would contain a chapter on sanitary and phytosanitary measures, trade and sustainable development, bilateral safeguards, e-commerce, small and medium-sized enterprises, dispute settlement, and others.
The agreement in principle is the result of compromises and hence it presents benefits and challenges. While it has been highly welcomed by many EU industrial associations and agricultural associations of the Mercosur countries, it has also prompted significant criticism. Some EU agricultural associations have been outspoken in their negative assessment of the FTA. Civil society groups have expressed their strong opposition to the FTA arguing that it would foster large-scale deforestation and an expansion of agricultural land in the Mercosur countries, which would be incompatible with the climate change goals under the Paris Agreement and would also have serious implications for indigenous people.
In June 2020, five NGOs submitted a complaint to the European Ombudsman criticising that the external sustainability impact assessment for the trade pillar negotiations was finalised only after the agreement in principle was reached and that it does not contain up-to-date environmental data, notably on deforestation.
EU trade in goods with Mercosur picked up strongly from totalling €68 in 2020 to €88 billion in 2021. This very positive evolution, however, must be seen in the context of historically higher levels of trade in goods (2011: €91 billion). In 2021, the EU was Mercosur’s second largest trading partner after China whose trade with Mercosur stood at €141 billion according to European Commission data as of May 2022. The EU is the largest investor in Mercosur, with an investment stock of €330 billion in 2020.
Main negotiation issues
During the past 20 years of negotiations, the gap between the different positions concerning the level and pace of liberalisation of trade in agricultural and industrial goods, services and public procurement markets has been a challenge. Mercosur is a major producer of agricultural products such as beef and soybeans that already now make up a large part of Mercosur’s exports to the EU. According to a 2016 impact assessment, EU agricultural sectors would be affected to different degrees by the further opening of the EU market for Mercosur agricultural imports. Some EU offensive agricultural goods would benefit from increased market liberalisation, such as cereals as well as wine and spirits. By contrast, sensitive products for the EU such as beef, rice, poultry and sugar would come under pressure. Apart from market access for agricultural products, provisions on SPS measures and the protection of GIs have been key issues for the EU. As regards industrial sectors, notably the automotive, pharmaceutical, chemical, and textile sectors, financial and maritime services, and public procurement, EU offensive interests have contrasted with Mercosur’s defensive interests.
Position of the European Parliament
In its 2013 resolution on trade negotiations between the EU and Mercosur, the EP stressed their economic and political importance. It regretted their slow pace, deplored the protectionist measures on trade and investment taken by some Mercosur countries and reiterated the importance of including respect for democratic principles, fundamental and human rights and the rule of law, as well as environmental and social standards.
On 20 March 2023, Parliament’s Committee on International Trade (INTA) held a structural dialogue on trade issues with Executive Vice-President of the European Commission, Valdis Dombrovskis, who expressed his hope that the EU-CELAC Summit in July 2023 could be an opportunity to move forward with the agreement based on the addendum that is still under discussion.
During the 8th legislative term José Ignacio Salafranca (EPP, Spain) was the rapporteur for the EU-Mercosur Association Agreement.
- European Parliament, Resolution of 17 January 2013 on trade negotiations between the EU and Mercosur, 2012/2924(RSP)
- European Commission, Sustainability Impact Assessment in Support of the Association Agreement Negotiations between the European Union and Mercosur, Final Interim Report, February 2020
- European Commission, Civil Society Dialogue, Meeting on the EU-Mercosur Trade Agreement, 15 July 2019 and the minutes of 7 August 2019
- European Commission, New EU-Mercosur trade agreement. The agreement in principle, [es] [pt] [fr] [Disclaimer: The texts are published for information purposes only and will be final upon signature. The agreement will become binding on the Parties under international law only after completion by each Party of its internal legal procedures necessary for the entry into force of the Agreement (or its provisional application)],Press Release, 12 July 2019
- European Commission, individual chapters of the agreement in principle: Regional integration clause, Trade in Goods, Annex on import/export monopolies, Annex on export duties, Annex on trade in wine and spirits, Protocol on rules of origin, Specific measures concerning the management of preferential treatment, Customs and trade facilitation, Protocol on mutual administrative assistance in customs matters, Technical barriers to trade, Annex on motor vehicles, equipment and parts thereof, Sanitary and phytosanitary measures, Dialogues, Trade defence and global safeguards, Bilateral safeguards, Trade in services and establishment, Government procurement, Current payments and capital movements, Competition, Subsidies, State-owned enterprises, enterprises granted exclusive or special privileges, Trade and sustainable development, Transparency, Small and medium-sized enterprises, Dispute settlement, Annexes to the Dispute Settlement, press release, 12 July 2019; Intellectual property, Annex I Legislation of the parties, 6 September 2019
- European Commission, EU-Mercosur trade agreement: overview factsheet, factsheets on sustainable development, food safety and agriculture as well as country factsheets: on Austria [DE], Belgium [FR] [NL], France [FR], Germany, Ireland, Italy [IT] and Poland [PL] press release, 12 July 2019
- European Commission, Cumulative economic impact of future trade agreements on EU agriculture, Joint Research Centre, 2016
- European Parliament, EPRS, The trade pillar of the EU-Mercosur Association Agreement, International Agreements in Progress Briefing, [ES] [PT], August 2019
- European Parliament, EPRS, EU trade with Latin America and the Caribbean: Overview and figures, [DE], [ES], [FR], [PT], In-Depth Analysis, December 2019
- European Parliament, EPRS, Amazon deforestation and the EU-Mercosur deal, At a Glance, October 2020.
Author: Gisela Grieger, Members' Research Service, firstname.lastname@example.org
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