EU and Mercosur forge ground-breaking partnership agreement

In a historic development, the European Union (EU) and Mercosur, the South American trade bloc comprising Brazil, Argentina, Paraguay, and Uruguay, have reached a political agreement finalising negotiations on a wide-ranging partnership.

European Commission President Ursula von der Leyen, alongside Brazilian President Luiz Inácio Lula da Silva, Argentinian President Javier Milei, Paraguayan President Santiago Peña, and Uruguayan President Luis Lacalle Pou, announced the deal today, calling it a landmark achievement for geopolitical and economic collaboration.

“This is a win-win agreement, which will bring meaningful benefits to consumers and businesses on both sides,” von der Leyen emphasised.

The agreement, which stands as one of the largest free trade deals ever negotiated, promises transformative effects on trade, sustainability, and geopolitical relations. It aims to bolster economic resilience and competitiveness while promoting strategic ties between like-minded regions.

Key economic benefits include:

€4 billion in tariff savings: EU exporters will save billions annually through the removal of prohibitive tariffs, enhancing market access for European businesses.
Supply chain diversification: The deal secures access to critical raw materials essential for industries like renewable energy and green technologies.
Support for SMEs: By cutting red tape, the agreement is designed to empower small and medium enterprises in both regions to engage more actively in global trade.

The agreement also underscores Mercosur’s commitment to sustainability. Binding obligations to halt deforestation, enforceable environmental protections, and adherence to the Paris Agreement stand at the forefront of the deal’s provisions. Furthermore, €1.8 billion in EU support will facilitate green and digital transitions across Mercosur nations.

The European Automobile Manufacturers’ Association (ACEA) hailed the agreement as a significant step for the automotive industry.

Sigrid de Vries, Director General of the European Automobile Manufacturers’ Association (ACEA), stated:

“The conclusion of this deal will contribute to strengthening the global competitiveness of European automobile manufacturers by eliminating high tariffs and addressing technical barriers to trade in their exports to the Mercosur market.”

“This positive news comes at a pivotal moment for the automotive industry, which is currently facing critical challenges in the transition towards decarbonisation.”

With negotiations concluded, the agreement will undergo legal review and translation into all official EU languages. It will then be presented to the European Council and Parliament for ratification.