After 25 years of negotiations, the interim Trade Agreement between the European Union and the Mercosur countries will come into force on Friday 1 May, providing for the gradual elimination of customs duties on over 91% of EU goods (see EUROPE 13853/28). As of that date, non-tariff barriers and technical barriers to trade will also be gradually lifted.
1 May marks “a major day for the European Union in trade. With the provisional application of the EU-Mercosur agreement, it’s time to get down to work and ensure that this historic agreement bears fruit. Trade agreements are essentially about buying and selling goods and services, according to mutually agreed rules and for reciprocal benefit; this will be our top priority in the weeks and months to come”, responded Commissioner for Trade and Economic Security Maroš Šefčovič, on Thursday 30 April.
The Commission has already embarked on a structured and intensive awareness-raising campaign targeting EU businesses, particularly SMEs, to ensure they possess all the information they need to start exploring the tremendous opportunities available to them.
The agreement will phase out import duties on over 91% of EU goods exported to Mercosur, a market of over 700 million people, including automobiles, pharmaceuticals, wine, spirits and olive oil.
“EU farmers and agri-food producers will also benefit from reduced or even eliminated customs duties, making their products more competitive within Mercosur”. The agreement “should boost EU agri-food exports to the region by 50%, with the first tariff quotas and reductions coming into force tomorrow”, adds the commissioner.
Gabriel Mato (EPP, Spanish), Committee on International Trade (INTA) standing rapporteur for Mercosur, welcomed in a statement “the launch of this important partnership between the EU and Mercosur which represents a significant opportunity to strengthen our economic and political ties with Latin America. Its provisional application opens a crucial phase to assess the agreement’s real impact on the ground. The EU must rise to the occasion and deliver on all its commitments in the agreement, ensuring fair competition and effective support for Europe’s most sensitive sectors, particularly agriculture”.
Chair of the INTA Committee Bernd Lange (S&D, German) likewise expressed the view that “this is a real game-changer and exactly the right remedy in these economically challenging times. The agreement is a strategic signal against isolationism, in favour of partnership and rules-based trade”.
He said he was “confident that by the time [...] Parliament makes its final decision, the agreement will already have borne economic and political fruit”. Indeed, the future of the comprehensive political agreement still hinges on a ruling by the Court of Justice of the European Union, to which European Parliament referred the matter on 21 January (see EUROPE 13791/2).
From the business community’s perspective, the provisional application of the commercial side is welcome. “This development opens a new chapter in the relationship between the EU and the Mercosur countries, which have demonstrated their willingness to collaborate and engage in open and rules-based trade with reliable partners at a time of increasing protectionism, geopolitical turmoil, and rising costs”, commented Markus Beyrer, director general of BusinessEurope, on Thursday 30 April.
The organisation also called on EU Member States to ratify the EU-Mercosur Partnership Agreement, which encompasses both the trade and political provisions of the agreement. The iTA (interim Trade Agreement) will cease to apply once the Partnership Agreement enters into force.
While the Mercosur countries are keen to move forward rapidly on this political front (see EUROPE 13856/7), concerns persist regarding the agreement’s impact on European agriculture, despite the safeguard measures provided for in the event of significant market disruption within the EU.
In any case, European Commission President Ursula von der Leyen and European Council President António Costa are scheduled to hold talks with Mercosur leaders via videoconference on Friday 1 May, in an effort to maintain political momentum surrounding this partnership. (Original version in French by Juliette Verdes)