EU and Mercosur agree to trade deal

The European Union and the Southern Common Market (Mercosur) announced Friday that they reached agreement on a new trade deal.

EU Commission chief Jean-Claude Juncker said it was the EU’s biggest deal to date and, at a time of trade tensions between the US and China, showed that “we stand for rules-based trade”.

Brazil’s President Jair Bolsonaro said it was “historic” and “one of the most important trade deals of all time”.

The deal aims to cut or remove trade tariffs, making imported products cheaper for consumers while also boosting exports for companies on both sides.

The EU is Mercosur’s number one trade and investment partner. EU exports to Mercosur were €45bn in goods in 2018 and €23bn in services in 2017.

The EU is the biggest foreign investor in Mercosur, with a stock of €381 billion, while Mercosur’s investment stock in the EU amounts to €52 billion in 2017.

While the relationship is very substantial, both exporters and potential investors face barriers in Mercosur markets.