A Significant Trade Deal Agreed between EU and South America

A Significant Trade Deal Agreed between EU and South America

The EU and South American bloc, Mercosur, reach a trade deal after 20 years of negotiations.

The work on the trade deal announced on 28 June 2019 began on June 28 1999. Under the deal, the South American region of over 260m people (Brazil, Argentina, Paraguay and Uruguay) will get preferential access to European goods and services, avoiding approximately €4bn in annual customs duties on exports.

For Mercosur, some of the greatest prizes include preferential access to EU markets for beef, ethanol and sugar, while the most difficult concessions included slashing tariffs on imported European cars and parts and opening up its public procurement market.

For the EU, the most controversial issues centred on agriculture. The improved agricultural market access for Mercosur includes a new 99,000-tonne annual quota for beef, which is equivalent to 1.2 per cent of the bloc’s total annual beef consumption.

This is the EU’s biggest deal to date. It is set to create a market for goods and services covering nearly 800m consumers, making it the largest in the world in terms of population.

In the past two years, the EU concluded trade agreements with Canada, Mexico and Japan. However, the EU deal with Mercosur could see savings on tariffs that are four times as big as those made in the Japan deal, EU trade commissioner Cecilia Malmstrom said.

Image: Buenos Aires, Argentina / Pixabay

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Chris McCarthy is an Zurich-based researcher and adviser at a consulting firm specialising in global economy, policy and trade. As a journalist, Chris writes about the global issues that have the most profound impact on the business environment.