EU fast-tracks trade deal with South America’s Mercosur bloc

The free trade agreement between the European Union (EU) and the South American bloc of Mercosur states – Argentina, Brazil, Paraguay and Uruguay – has been provisionally approved despite a pending review by the EU Court of Justice, according to a 28 February report by Deutschland.

Concluded in January after 25 years of negotiations, the EU-Mercosur deal could remove around €4bn (US$4.7bn) of duties on EU exports, making it the bloc’s biggest ever free trade agreement in terms of potential tariff reductions, Reuters wrote on 27 February.

The European Commission (EC) announced on 27 February that the EU would provisionally apply the agreement, one day after Argentina and Uruguay ratified the agreement, with Brazil and Paraguay expected to follow soon, Reuters wrote.

The agreement would create a market with 720M people and cut tariffs, EU Commission President Ursula von der Leyen said.
It was signed on 17 January by the EC and EU Council of Ministers but, four days later, members of the European Parliament (EP) opposing the agreement secured a majority vote in the EP to refer it to the European Court of Justice (ECJ) for a legal review, which had the potential to delay its full implementation by two years, Reuters wrote.

However, the decision to provisionally apply the agreement meant the EU and Mercosur could begin reducing tariffs and applying other trade aspects of the agreement prior to ultimate approval by the EU assembly.

France - the EU’s largest agricultural producer - had been the most vocal opponent of the Mercosur deal, saying it would sharply increase imports of cheap beef, sugar and poultry and undercut domestic farmers, who had staged repeated protests, Reuters said.

In the grains and oilseeds sector, Mercosur countries would export more crops, such as soyabeans, to the EU, increasing competition for European farmers, World Grain wrote on 20 January.

According to data from EU statistical agency Eurostat, current oils and fats trades between the two regional blocs include €134.26M’s (US$157.6M) worth of EU soyabean oil imports from the Mercosur region in 2024 and €2.9bn’s (US$3.4bn) worth of soyabean imports, the vast majority from Brazil.

The EU also exported €595M’s (US$698.6M) worth of olive oil to the Mercosur, mostly to Brazil; while importing nearly €57M’s (US$66.9M) worth of olive oil from the region, mainly from Argentina.

Trade benefits for the EU oils and fats industry included the removal of current high Mercosur tariffs levied on exported EU dairy products (28%), olive oil (10%) and refined soyabean oil (9.6%) over the next 10 years, Eurostat data showed.

Source: Oil & Fats International