The world’s largest free trade area and billion-dollar savings for European companies are not good for all EU countries, nor even the fact that China’s growing power could be curbed. Among other things, these would be offered by the Mercosur agreement, whose fateful moments are being experienced in the EU.
The Mercosur Agreement is a trade agreement between the EU and Brazil, Argentina, Uruguay and Paraguay that has been negotiated for more than 20 years. A political agreement was reached on the agreement in 2019, but the final seal is still missing.
According to EU sources, we are now living in critical moments for the Mercosur agreement: the agreement should be approved later this year, or else it may happen that it is not approved at all.
Billions in savings
The EU and the Mercosur group form a trade area of almost 800 million inhabitants, which includes 31 countries. They trade with each other, the value of which rises to one hundred billion euros.
The Mercosur agreement would eliminate tariffs on more than 90 percent of products. According to the EU’s calculations, it would mean savings of around four billion euros for European companies.
The agreement would also make it easier for Finnish companies to enter the market. It would open trade prospects, especially in industrial products, such as machines and equipment.
It is also about security policy. The EU wants to bind the Mercosur countries to even closer cooperation, so that they do not drift under China’s influence.
The agreement could also show Trump that free trade is better than customs walls.
Macron sooloilee
Among the EU countries, France in particular is waging a delaying battle so that the Mercosur agreement is not approved.
In many EU countries, it has caused outrage that the French president Emmanuel Macron recently went to Argentina to “do mole work” and tell how bad the deal is.
“It’s quite outrageous,” one EU source describes.
The French farmers who block the roads with their tractors and protest are also fighting for the rejection of the Mercosur agreement.
The agreement is also opposed in Austria, Belgium, Poland and the Netherlands. Agriculture is the main concern of these countries as well.
With the Mercosur agreement, Brazil, Argentina, Uruguay and Paraguay could import agricultural products to Europe more cheaply than before. The import of meat is also liberalized, but it is still limited by significant quotas.
In Europe, the Mercosur agreement would benefit especially the automotive industry, but also agricultural producers, because the agreement would lower customs duties on cars exported from Europe and improve market access for wines and cheeses.
Finland is worth it
The fate of the agreement will be discussed on Thursday in Brussels among EU trade ministers.
From Finland, the Minister of Development Cooperation and Foreign Trade will participate in the meeting City Tavio (p.s.). He says in Brussels that Finland supports the acceptance of the agreement.
In order to get the agreement approved, support elements for European agricultural countries may still be baked into it.
The future will show whether they will be enough, or whether the EU will move to a time of smaller trade agreements.