EU’s largest trade agreement ever concluded on
28 June 2019: the EU and the Mercosur brought to fruition the long-standing
negotiations on a comprehensive trade agreement between the EU and the Mercosur
(the “Association Agreement”). The Mercosur is an economic block covering
Argentina, Brazil, Paraguay and Uruguay.
The largest treaty of its kind for the EU and
the first one for the Mercosur
The Association Agreement is the largest trade
agreement concluded by the EU and will mean savings of more than EUR 4 billion in
custom duties per year for EU companies. It was finalized after 20 years
negotiations and it is the first major trade agreement signed by the Mercosur.
The Association Agreement will create a market
for goods and services of 800 million persons, covering 32 countries and one
fourth of the total global GDP. By way of comparison, the current bilateral
trade totals EUR 88 billion per year for goods and EUR 34 billion for
services. It is expected that trade will increase substantially as a result of
the Association Agreement.
Furthermore, the Association Agreement opens —
for the first time — the public procurement market in the Mercosur countries
to EU companies.
The key aspects of the Association Agreement
Once the Association Agreement is fully implemented,
the trade agreement will eliminate customs duties currently applying to more
than 90% of the goods exported to the Mercosur by EU companies. These include goods
in the industrial, agriculture and food sectors. The Association Agreement will
provide EU companies with the opportunities to export products in sectors that are
currently subject to high custom tariffs including – among others – automotive,
machinery, pharmaceutical and chemical sectors. The Association Agreement will also
simplify the export of goods and services from the EU to one market with a high
growth potential.
The Association Agreement covers the following
areas: a) food safety, animal and plant health; b) environmental protection and
labor conditions (including the implementation of the Paris Climate Agreement),
c) services; d) E-commerce; e) government procurement f) intellectual property
rights and trade secrets, g) Geographical Indicators for certain distinctive
products of the EU (including for example the “Tiroler Speck”) and the
Mercosur; h) technical regulations and standards; i) eases access to raw
materials and parts; j) small and medium size companies (facilitating access to
relevant information for export of goods and services); k) transparency; and l)
the involvement of the civil society.
Significantly, the Association Agreement also
provides for a dispute resolution mechanism regarding its interpretation and
application. Among other aspects, it provides open hearings, the publication of
decisions, and participation of interested parties. KNOETZL, of course, will continue to lead in
monitoring developments, opportunities, procedures and the effectiveness of
these provisions, and all related aspects, as they come on line.
The next steps for the EU and the Mercosur
leading to its implementation
The next steps for the EU are finalizing the
revision of the final agreed text of the Association Agreement, translation
into all official languages and submission of the Association Agreement to the
EU Members States and the European Parliament for approval. The members of the
Mercosur will also submit the final text of the Association Agreement for
approval of their respective Parliaments.
For more information about KNOETZL, please
contact Emmanuel Kaufman or any legal representative of your choice at our firm.
