On June 28, 2019 the Southern Common Market (MERCOSUR) and the European Union (EU), concluded, after more than twenty years, negotiations in Brussels for the subsequent signing of a Trade Agreement (the Agreement).
The Agreement will create a market of goods and services of 800 million consumers and almost a quarter of the world´s GDP.
It is important to note that the Agreement does not entail an immediate opening of imports into Mercosur since, due to an EU concession, a system of gradual tariff reduction will be applied to EU products, which provides for terms of up to 15 years for the entry into force of the tariff improvements.
In contrast, tariff reductions of exports of Mercosur products to the EU will be made in substantially shorter terms, and more than 85% of those exports will enjoy immediate tariff elimination in the EU.
In terms of industrial goods, the EU will liberalize almost 100% of its trade. Mercosur will do so by 90%.
The EU will offer full and immediate liberalization of tariffs for 80% of Mercosur´s exports of industrial products to the EU; while Mercosur will obtain long terms of up to 15 years to gradually liberalize certain sensitive sectors.
Considering agro-industrial goods (Argentina´s exports of these goods to the EU reach up to 63%), the EU will liberalize 99% of Mercosur's imports. For 81.87% of these goods, the EU will eliminate import tariffs. For the remaining 17.7%, it will offer quotas or fixed preferences.
The Agreement will establish bilateral safeguard mechanisms that will allow temporary suspension of tariff preferences or their reduction in case of threat or serious damage to an industrial sector, and will implement a dispute resolution mechanism.
Additionally, it will eliminate non-tariff barriers, facilitate exports, and will include sanitary and phytosanitary protocols, and certification procedures for origin, predictability and regulatory transparency.
With regard to services, EU and Mercosur will offer the other party´s services providers the same treatment it gives to its own national providers.
In order to formalize the Agreement, the text will have to be drafted and raised to the Congresses of each of Mercosur's Parties and the European Parliament for its approval.
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