EU Commission and Mercosur Agree on Landmark Free Trade Agreement
The agreement will create the world’s biggest free trade zone
This week the European Union and their counterparts from the Mercosur bloc of South American countries (Brazil, Argentina, Paraguay, and Uruguay) finalized negotiations to conclude this landmark agreement which is estimated to save EU businesses 4 billion euros worth of trade duties per year, bid for public contracts on equal terms with Mercosur countries, and receive exclusive preferential access to some critical raw materials and green goods. The South American countries will in turn have preferential access to export to the European Union market including some agricultural products.
The agreement which will create the world’s biggest free trade zone is decades in the making, talks originally began in 1999. As an economic bloc, Mercosur is the world’s fifth-largest economy with a population of over 295 million, covering a vast geographical area of over 14 million km². EU Commission President Ursula von der Leyen traveled to Uruguay this week ahead of finalizing the agreement.
On the European side, the agreement will now need to be approved by the European Parliament and the EU Member States which will not be an easy task. Several member states are not happy with the agreement, including France, the second biggest member state, over concerns about the effects the agreement could have on its large agriculture sector. It remains to be seen if a blocking minority will emerge in the coming weeks and months. To block the deal at least four EU countries representing at least 35% of the EU population would normally be required when qualified majority voting is used.