The Mercosur Deal: Explained


With all the recent talk of the Mercosur trade deal, we offer an explanation for those out of the loop.

The Mercosur Deal: Explained

  • ADDED
  • 2 years ago

With all the recent talk of the Mercosur trade deal, we offer an explanation for those out of the loop.

The Mercosur region was first established in 1991 and includes Argentina, Paraguay, Uruguay, Brazil and now Venezuela.

The much discussed trade deal between the EU and Mercosur has been in the works for a number of years now, with negotiations being relaunched back in 2010. Ten rounds of discussions took place in total with negotiations then paused in 2012.

Discussions were then reopened in May of 2016, with offer exchanged for the first time since the relaunch. The next round of discussions is due in Brasilia between October 2nd and 6th 2017.

What the deal will cover: The free trade agreement in discussion will be part of an overall negotiation for bi-regional Association Agreement, while the deal covers a range of topics such as:

  • Rules of origin
  • Technical barriers to trade
  • Sanitary and phytosanitary measures
  • Services
  • Government procurement
  • Intellectual Property
  • Sustainable Development
  • Small and Medium sized enterprises.
Who is negotiating and why?
There are four main countries in the Mercosur region involved in the recent negotiations with the EU. These include Paraguay, Brazil, Argentina and Uruguay, with Venezuela the latest to join. The EU accounts for Mercosur’s first trading partner and makes up 21% of the bloc’s total trade for the whole of 2015.

They are negotiating to try and implement changes to the current trade agreement and with the recent Brazilian Meat scandals standards are the focal point of any trade agreement. It is also felt that the EU’s trade to these regions will be more important, with Brexit approaching.

The EU’s exports to the Mercosur region increased by over 100% in ten years, from 2005 to 2015. Exports were worth over €46 billion to the EU in 2015, while Mercosur exports to the EU have also increased in the same ten year period, from €21 billion to €46 billion.

Mercosur Exports:
The Mercosur regions export a number of products used extensively by consumers in the EU. In 2015 their biggest exports to the EU were mainly agricultural produce. This included products such as foods and beverages, tobacco, vegetable products, fruits, coffee, meats and other animal products. They also exported mineral products such as wood and paper products and machinery.

The EU also are one of the main exporters to commercial services to the Mercosur region, this accounted for over €20 billion in 2014. The EU also exports machinery, vehicles, machinery parts, chemicals and pharmaceuticals to the regions.

The EU is currently the biggest foreign investor in the region, with an estimated €387 billion of stocks in 2014. Mercosur also hold a high number of stocks within the EU, totalling €115 billion in 2014.

The EU hope that these negotiations will lead to better screening of produce prior to exportation by these Mercosur regions.

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