Mercosur and European Union announce conclusion of trade agreement

Finally, after 25 years, the agreement between Mercosur and the European Union reaches its final lines. This Friday (6) it was announced that negotiations on the commercial partnership between the two blocks, which began in 1999, were concluded.

The announcement took place during the Mercosur Heads of State Summit, which takes place in Montevideo, Uruguay. This is considered a victory for Brazilian foreign policy and the Lula government, which worked tirelessly for the agreement.

Directly from the Uruguayan capital, President Lula celebrated the agreement on his social networks: “After more than two decades, we concluded negotiations on the agreement between Mercosur and the European Union.”

After more than two decades, we concluded negotiations on the agreement between Mercosur and the European Union.

📸 @ricardostuckert pic.twitter.com/u3iWzO6BJz

— Lula (@LulaOficial) December 6, 2024

In the photo, he is next to presidents Lacalle Pou, from Uruguay, Santiago Peña, from Paraguay, Javier Milei, from Argentina, and the head of the European Commission, the German Ursula von der Leyen, who traveled to South America with the purpose to conclude negotiations.

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In his speech about the announcement, Leyen highlighted that everyone benefits from the agreement and sent a message to those who are concerned on the European continent by saying that both rural and urban residents will benefit from more work and opportunities.

He also sent a message to the world about the Brazilian Amazon. She made a point of emphasizing that President Lula’s government preserves the biome and that the entire planet has the task of helping in this mission.

On her networks, the German shared the video with her speech and that of President Lacalle Pou. In the text of the post, he highlighted that the “agreement is a victory for Europe” and that now many other small companies, in addition to the 30 thousand that already export to Mercosur, will have access to this market.

This agreement is a win for Europe.

30.000 European small companies are already exporting to Mercosur.

Many more will follow.

EU-Mercosur reflects our values and commitment to climate action.

And our 🇪🇺 health and food standards remain untouchable ↓ https://t.co/Swp66exJrY

— Ursula von der Leyen (@vonderleyen) December 6, 2024

One of the final lines that has been drawn up in recent days concerns public purchases in Mercosur, which European companies insisted on being included in the agreement so that their companies can participate.

Even if the agreement is negotiated and agreed between the parties, other paths must be taken until the final signature and the negotiation begins to take effect. After being translated, reviewed by technicians and signed, the agreement must be submitted to the Council and the European Parliament, where countries such as Poland, Italy and, mainly, France, promise a fierce opposition to block what was negotiated. These nations are faced with incessant protests by farmers, who are asking for more protection for their goods, which constitutes a reserve agricultural market.

Even though these countries are against it, the others, led by Germany, are moving quickly to be in better conditions from 2025 onwards. In addition to trying not to fall so far behind in the dispute with the Chinese, the Europeans want access to more consumer markets to anticipate the protectionist policies that Donald Trump, upon returning to the White House, should adopt.

The agreement outlined 25 years ago involves a population of “718 million people and economies that, together, reach approximately US$22 trillion”, points out the Brazilian government. For South Americans, the expectation is to increase exports of commodities (which should have zero or reduced taxes), especially agricultural products. Likewise, greater investment attraction is expected to increase the manufacturing park with more accessible machines and equipment to boost productivity and competitiveness.

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For Europeans, the measure aims to have greater scope for the sale of their manufactured and industrial products with low or no taxes, as well as the possibility of having agricultural and mineral commodities that reached their population and industries at a lower price with the elimination of barriers.

Specifically for Brazil, the government is working with a study by the Institute for Applied Economic Research (Ipea) that indicates a 0.46% growth in Brazilian GDP with the agreement between 2024 and 2040. Furthermore, the agreement could increase investments in the country by 1.49%, compared to the scenario without the partnership, Planalto attributes.

Announcement

In a joint statement, the states of Mercosur and the European Union spoke of the conclusion of negotiations on the partnership agreement, and the agreed texts will be released in the coming days.

See the statement:

The Signatory States Parties to MERCOSUR – the Republic of Argentina, the Federative Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay – and the European Union announced, at the 65th MERCOSUR Summit Meeting (Montevideo, December 6, 2024 ), the final conclusion of negotiations for a Partnership Agreement between the two regions, after more than two decades of negotiations.

Taking into account the progress made in recent decades until June 2019, MERCOSUR and the European Union have engaged, since 2023, in an intense negotiation process to adjust the agreement to the current challenges faced at national, regional and global levels. Over the past two years, the two parties have held seven rounds of negotiations, among other meetings, and have committed to reviewing relevant matters.

In light of the progress made since 2023, the Partnership Agreement between MERCOSUR and the European Union is now ready for legal review and translation. Both blocs are determined to conduct such activities in the coming months, with a view to the future signing of the agreement.