Opportunities of the Mercosur agreement

The agreement is close to finalisation – despite resistance

After years of negotiations, the European Union could sign a comprehensive free trade agreement with the Mercosur countries, consisting of Argentina, Bolivia, Brazil, Paraguay and Uruguay. The free trade agreement aims to eliminate a large proportion of mutual tariffs, simplify import processes and mutually recognise trademark rights. After the decision by the European Commission, however, the EU member states still have to approve the agreement. This is not a sure thing due to resistance from France and Poland. However, the authorities in Brussels apparently assume that enough votes will be cast in favour for a majority of 65%.

The agreement offers opportunities for the EU economy

Overall, the five Latin American countries, with a combined gross domestic product (GDP) of around 3 trillion US dollars, are only as big as the economy of France. At 60 billion US dollars, the EU's exports of goods to these countries also account for less than 0.3% of European economic output. At first glance, the Mercosur region appears to play a significantly smaller role than other trade partners such as the US or China. Nevertheless, the agreement offers opportunities for the European economy. This is because the region is home to almost 300 million people, and the economy of Brazil, in particular, could grow faster in the future than that of the industrialised countries. An agreement would also eliminate the following tariffs on European exports for this important growth market:

cars – 35 per cent
machinery – up to 20 per cent
chemicals – up to 18 per cent
pharmaceuticals – up to 14 per cent

For full text see attached PDF-Version.