European Union and Mercosur trade bloc announce free trade deal 25 years in the making

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MONTEVIDEO, Uruguay (AP) — The European Union and the Mercosur group of Latin American countries have agreed to the terms of a long-awaited free trade deal, European Commission President Ursula von der said Friday. Leyen, in Montevideo, the Uruguayan capital.

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The EU-Mercosur agreement aims to create one of the world’s largest free trade zones, covering more than 700 million people and almost 25% of global GDP.

Much like the U.S.-Mexico-Canada Free Trade Agreement, its goal is to reduce tariffs and trade barriers, making it easier for businesses on both sides to export goods.

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Mercosur includes Brazil – which accounts for the lion’s share of the bloc’s territory, economic output and population – as well as Argentina, Paraguay, Uruguay and Bolivia, the newest member. Venezuela’s membership has been suspended indefinitely.

This agreement does not represent the end of the story for Europeans. France leads a group of member countries that still have objections to the agreement, and all 27 member countries must approve it for the deal to come into force.

In remarks aimed at his “fellow Europeans”, and perhaps the most skeptical like farmers in France and elsewhere, von der Leyen said it would have a positive impact on around 60,000 companies that export to the region. Mercosur.

She said they “will benefit from reduced tariffs, simpler customs procedures and preferential access to certain essential raw materials”. This will create huge business opportunities.

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“And to our farmers,” she said, “we have heard you, listened to your concerns and we are acting on them. This agreement includes strong safeguards to protect your livelihood.

Reaching an agreement has been a long process, dating back to the Rio de Janeiro summit in 1999. Negotiations quickly stalled due to different economic priorities, tariffs, regulatory standards and agricultural policies on both sides. of the Atlantic Ocean. For about a decade, the EU sought to protect its agricultural sector while Mercosur sought to increase access to its agricultural products.

Some momentum occurred after 2010, when both sides focused on eliminating tariffs, although problems remained regarding agriculture. The culmination of this movement was a political agreement in June 2019, when negotiators announced a deal that included provisions on tariff reductions and commitments on environmental standards.

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Since then, the two parties have struggled to ratify an agreement. European concerns about deforestation in the Amazon, notably under the presidency of Jair Bolsonaro in Brazil until the end of 2022, have delayed an agreement.

Left-wing President Luiz Inacio Lula da Silva, Bolsonaro’s successor, initially opposed a deal more than two decades ago. But since returning to power in 2023, his administration has pushed for progress.

“After more than two decades, we have concluded negotiations on the agreement,” Lula wrote on the social network X.

The outgoing government of Argentina, the bloc’s second-largest economy, opposed the deal, but President Javier Milei, who took office last year, supported a deal.

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