In discussions held alongside the MERCOSUR Summit, the European Union and Mercosur states reached a political agreement to conclude long-running negotiations on the EU-MERCOSUR free trade agreement. The President of the European Commission, Ursula von der Leyen, had travelled to Uruguay for the meetings. By concluding the agreement, the EU and the MERCOSUR states are expanding their partnership. The key aim is to largely eliminate tariffs between the two trade regions. 

Federal Chancellor Olaf Scholz welcomed the agreement on the messaging platform X, stressing that a key obstacle for the treaty had now been overcome. Soon “a free market can develop for over 700 million people, boosting growth and competitiveness,” he wrote. Federal Minister for Economic Affairs Robert Habeck also expressed his pleasure about negotiations being concluded, saying that Europe needed to deepen partnerships, not least to be able to assert its values and strengthen its economy.

Tariff-free market for greater economic growth

The Federal Government had strongly lobbied for the conclusion of this agreement which is designed to create one of the world’s largest trade areas. According to the European Commission’s calculations, the elimination of tariffs could lead to savings worth four billion euros for European exporters. It therefore makes a vital contribution to promoting growth and competitiveness on both sides.

The fact that the political agreement has been reached after 20 years of negotiations sends an important signal about the credibility and efficacy of EU trade policy. The agreement includes some fundamental arrangements to promote sustainability, in particular with regard to protecting the rainforest. Both sides undertake to implement the Paris Agreement as part of the treaty.

The trade agreement between the EU and the MERCOSUR states Argentina, Brazil, Paraguay and Uruguay sits within the context of an association agreement. This agreement includes provisions on political dialogue, cooperation and trade.

Further steps are needed

Further steps are needed before the agreement can be signed and enter into effect. The Federal Government is committed to ensuring that these steps are taken. Over the next few months, the agreement texts will be subjected to a legal review by the European Commission and will be translated into the contracting states’ languages.