The European Union and Mercosur member states—Argentina, Brazil, Paraguay and Uruguay—in late June 2019 reached a political agreement for a trade agreement.
The EU is the first major partner to reach a trade agreement with Mercosur. The agreement is broad, covering both tariff and regulatory issues, including services, government procurement, trade facilitation, technical barriers, sanitary and phytosanitary measures, and intellectual property.
The following items are among the customs duty-related benefits under the agreement.
Elimination of customs duties
Over a period of 10 years, the Mercosur trade agreement will remove 91% of the customs duties on EU exports to the Mercosur. The Mercosur countries will remove high duties on industrial products and agricultural goods, such as:
The agreement also opens up the EU market to goods from Mercosur. Of the EU duties on imports from Mercosur, 92% will be eliminated over a transition period of up to 10 years. However, the EU will limit imports of sensitive agricultural products such as beef, ethanol, pork, honey, sugar, and poultry; and these products will have to comply with the EU’s rigorous standards. Mercosur exports will consequently not pose a risk to the EU market as a result of unlimited imports in sensitive sectors.
With regard to raw materials and parts, the agreement also offers industries in the EU and Mercosur easier access to boost their competitiveness. The agreement will reduce or eliminate duties that Mercosur currently imposes on exports to the EU of products such as hides and skins or soybean products (which are key materials for the EU leather industry and livestock). The agreement also prohibits import and export price requirements, and import and export monopolies.
Reducing technical barriers
In addition, the EU and Mercosur agreed to reduce technical barriers. Different technical regulations and standards on products in other markets can be a major obstacle to exporters because they impose extra costs for complying with them. The trade agreement promotes transparency and the use of international standards to facilitate market access. Furthermore, the agreement will make it easier for companies to prove compliance with standards and regulations, notably through the recognition by Mercosur states of conformity tests on EU products performed in the EU in certain sectors.
After reaching the trade agreement on 28 June 2019, the parties will now proceed to legal revision and a final text of the agreement will be produced. The European Commission will then translate the final text into all EU official languages and submit the agreement for approval by the Council and the European Parliament. This could easily take another year or two.
Read a July 2019 report prepared by the KPMG member firm in the Netherlands
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