[International]Europe and South America ‘giant economic market’ in front of us…EU-Mercosur FTA Agreement

The European Union (EU) and the South American Common Market (Mercosur, MERCOSUR) have concluded free trade agreement (FTA) negotiations in 25 years and agreed to launch a large single economic market covering Europe and South America.

“The EU and Mercosur have completed discussions to conclude a landmark FTA,” the European Commission and Mercosur secretariat said in a press release on the 6th local time. “We have drawn a win-win agreement that will benefit both consumers and businesses on the basis of fairness and mutual benefit.”

European Commission President Ursula von der Leyen, Brazilian President Luiz Inácio Lula da Silva, Argentine President Javier Milay, Uruguay President Luiz Lacaye Pou and Paraguay President Santiago Peña gathered to celebrate the conclusion of FTA negotiations at the Mercosur Summit held in Montevideo, Uruguay.

President Lula, who has been active in signing FTA negotiations between the two sides, welcomed it, calling it “a historic achievement in 25 years.”

Mercosur is a joint market launched in 1995 by four countries: Brazil, Argentina, Paraguay and Uruguay, which completely eliminated trade barriers.

Venezuela joined in 2012, but it is now disqualified from full membership due to political and diplomatic problems.

With the conclusion of FTA negotiations between the two sides, a huge single market with a population of 700 million people and more than 25% of the world’s GDP is on the verge of being born.

Mercosur member states believe that exports of agricultural, livestock, and marine products such as beef to Europe will increase significantly.

In the case of the EU, it emphasized that tariffs worth 4 billion euros (about 6 trillion won) per year could be reduced in exports to Mercosur member states, including automobiles and drugs.

“More than 350 EU products will be protected by geographical indications, and European health and food standards will be maintained,” the EU Commission said. “Mercosur exporters must strictly comply with relevant regulations to enter the EU market.”

The EU and Mercosur also expected effects such as diversifying supply chains, promoting renewable energy technology and low-carbon fuel development and ensuring trade preferences, supporting foreign trade for small and medium-sized enterprises and securing raw materials essential for the global green transition.

FTA negotiations between the EU and Mercosur, which lasted 20 years from 1999, reached a theoretical agreement in 2019, but struggled for the next five years as the EU demanded new conditions such as curbing deforestation in the Amazon and protecting the environment.

Because of this, Mercosur said, he promised to develop specific plans to stop deforestation in the Amazon rainforest, as well as present clear and enforceable strategies for sustainable development, including labor rights and forest conservation.

Mercosur’s secretariat said, “We have allowed civil society groups to actively participate in related discussions to check the implementation of the agreement, including human rights or environmental issues,” adding, “We will also promote eco-friendly and digital transformation based on EU support worth 1.8 billion euros.”

“This agreement is not only an economic opportunity but also a result of political necessity,” said EU Commission President von der Leyen. “I know there are strong winds in the opposite direction of isolation and division, but this agreement will be seen as a response for us.”

This is interpreted as a response to U.S. President-elect Donald Trump’s announcement of an isolationist foreign policy, which forewarned universal tariffs of 10-20% on all imports.

The EU said the end of the negotiations amounted to the first step in the process towards finalizing the agreement.

Official documents will be released online in the future, and will be translated into all official EU languages after a final legal review by both sides, followed by a resolution by each parliament.

Reuters and AP reported that there is still a gateway for the EU side to overcome before the agreement enters into force.

With France still leading a group of member states opposed to the deal, all 27 EU member states must support it to enter into force.

French President Emmanuel Macron and French farmers are adamantly rejecting the deal, citing fears of damage to their agricultural and livestock industries caused by unfair competition.

“The EU-Mercosur FTA is only binding on the EU Commission, not on member states,” French Trade Minister Sophie Prima said, adding: “There are clear concerns about the impact on the environment and agriculture, and we will be opposing it at the rest of the stage.”

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Publish date : 2024-12-06 04:15:00

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