Mercosur and European Union reach historic free trade agreement

Mercosur and the European Union (EU) concluded today, June 28, negotiations on the trade agreement between the blocs, which will be one of the largest free trade areas in the world (25% of world GDP and market of 780 million people). The discussions, which lasted two decades, according to news reports, cover both tariff and regulatory issues, such as services, government procurement, trade facilitation, technical barriers, sanitary and phytosanitary measures and intellectual property.

The text of such Agreement is still subject to legal revision by the parties, but important points were announced via notes from the Brazilian Ministry of Foreign Affairs and the European Commission. Several Brazilian agricultural products, such as orange juice, fruit and soluble coffee, will have their tariffs eliminated by the EU, as well as 100% of the industrial products, which will have free trade between the bloc’s countries. In addition, Brazilian exporters will gain wider access to quotas for meat, sugar and ethanol, among others.

In addition, Mercosur shall eliminate, in a gradual way, most of the tariffs for European products. The European Commission highlighted that exports of products such as cars and car parts, machinery, chemicals, pharmaceuticals, clothing and footwear, in addition to those in the agri-food sector, such as chocolates, confectionery and wines, shall be boosted.

It should be noted, however, that the sanitary and phytosanitary standards for exporting food to the EU will not be changed, and that exporters must comply with the same food safety standards that are in place today.

In addition to tariff preferences for goods, the agreement will ensure effective access to various service segments, such as communication, construction, distribution, tourism, transportation and professional and financial services, in addition to allowing Brazilian companies to access public procurement in the EU’s bidding market. The Agreement also aims to simplify border control, implement the Paris Climate Agreement in the context of sustainable development, as well as issues such as human rights and social concerns.

The Agreement is expected to open up opportunities for new business between the blocs, even benefiting smaller companies through an online platform providing easy access to all relevant information.

After the legal revision of the text by the blocs involved, the final proposal will be forwarded for approval and signing into law.

Demarest’s International Trade and Customs team is available for any further information or clarification on this matter.