Concerns are mounting over the approval of the EU-Mercosur trade deal, which aims to enhance trade between the European Union and South American countries.
Overview of the EU-Mercosur Trade Agreement
The EU-Mercosur trade agreement seeks to eliminate significant tariff barriers currently hindering trade between the two blocs. Approximately 91% of goods traded will see tariff reductions.
Tariff Reductions and Economic Impact
This agreement is expected to lower the trade-weighted effective tariff rate on EU exports to Argentina from 10.3% in 2024 to about 1% over time. Tariffs on some products are notably high, reaching up to 35% for auto parts and cars, and 28% for dairy products.
- Estimated savings: $4 billion.
- Reduction timeline: Varies by product.
- Elimination of Mercosur tariffs for car parts: A linear process over ten years.
- EU tariff rate quota for beef: Implemented over five years.
Legal Structure of the Agreement
The agreement consists of two legal elements: the interim Trade Agreement (iTA) and the EU-Mercosur Partnership Agreement (EMPA).
- Interim Trade Agreement (iTA): Focuses on trade matters and requires approval from the European Parliament and the Council with a qualified majority.
- EU-Mercosur Partnership Agreement (EMPA): Broader in scope, addressing political dialogue, cooperation, investment, and environmental provisions.
Ratification Process
Full implementation of the EMPA necessitates ratification by all 27 EU member states. This process may take years, following national procedures.
Notably, the EU-Canada Agreement (CETA) has been provisionally applied since 2017, yet only 17 out of 27 member states have ratified it. This delay is primarily due to complex investment provisions, which are less comprehensive in the EMPA.
Potential Challenges Ahead
While discussions around the EMPA may continue, ambitious sustainability commitments could pose further challenges. As the approval process progresses, the European Commission aims to minimize delays by suggesting the provisional application of specific EMPA provisions, particularly those related to political and cooperative measures.
