New EU and South American Mercosur trade deal has been reached
By Company Registrations Worldwide, 19th Aug 2019
A historic free trade agreement which has been struck between the EU and South American, Mercosur group after negotiations opened up 20 years ago. The Mercosur trade deal will enhance cooperation and openness between Europe and South America. The deal could be one of the most lucrative EU free trade agreements to date.
The Mercosur group, also known as the Southern Common Market was formed in March 1991 between Argentina, Brazil, Paraguay and Uruguay under the Treaty of Asuncion. (Venezuela is a full member but has been suspended since 2016.) Mercosur is the leading trading bloc in South America which aims to achieve the free movement of goods, capital, services and people among its member states. Similar to the EU, except for its size, with an area of 12miliion square KM, it is four times as big as the EU. This region makes up the fifth largest market outside of the EU with 260 million consumers.
This is a monumental EU free trade agreement is expected to save some 4 billion euros of export duties. The deal will also bring sharp tariff deductions for the EU on goods such as cars, wine, and beef. The EU is the first major partner that Mercosur has struck a trade deal. The European Union is already Mercosur’s biggest trade and investment partner as well as its second largest trading partner for goods. The Mercosur group aims to increase access for its industrial product manufactures. The deal comes at a critical time in world trade as US the engages in a trade war with China and has threatened a number of other regions worldwide.
The Mercosur trade deal follows the completion of recent EU trade agreements with Canada, Japan, Mexico, and Vietnam. The deal will bring enhance collaboration and movement of goods between Europe and South America, however, the deal now needs to be fully ratified by the European Commission and by the European Parliament, a process that could take up to two years. EU entrepreneurs and business people eagerly await the implementation of one of the most promising EU free trade agreements to date which could give EU firms a head start.
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