A planned free trade agreement between the European Union and South American bloc Mercosur could boost Europe’s exports by a factor of two within five years. Such an increase would be conditional upon eliminating trade tariffs between the two blocs, which costs European exporters 4.4 billion euro a year, out of which 400 million euros sits with Spanish companies. The European Commission and the Mercosur member states, namely Brazil, Argentina, Uruguay and Paraguay, met in Buenos Aires at the end of March for talks.
The Commission said that both sides had made some progress in the negotiations but discrepancies remain in the areas of agriculture and market access. Despite these problematic areas, Brussels believes that the talks are at a “very advanced” stage, in part thanks to the “great reception and availability” of Argentinian President Mauricio Macri. Argentinian Foreign Minister Susana Malcorra has also recently met with Trade Commissioner Cecilia Mälmstrom to advance the negotiations.
The combined 250-million population of four Mercosur countries is “very attractive” for European companies, of which many are present in the South-American bloc. “Even a sector that has difficulties competing globally, like European steel, would find a huge market with Mercosur that would allow it to compete with Chinese steel, with the competitive advantage of not having to pay tariffs,” a European source commented. The EU hopes that the talks will be concluded by the end of this year. However, since it is a mixed agreement, EU member states will have to ratify the final deal in a similar manner like in the case of Comprehensive Economic and Trade Agreement (CETA) or the freshly negotiated EU-Canada treaty.