EU-Mercosur Trade Deal: Breaking New Grounds in Global Trade Relations

The EU-Mercosur trade agreement marks a significant milestone, aiming to remove 91% and 92% of duties on EU and Mercosur exports over 15 and 10 years, respectively. Amidst mixed reactions, the deal emphasizes economic diversification, environmental commitments, and levelling the playing field for public contracts within Mercosur.

The European Union has taken a significant step towards economic diversification and reducing reliance on major global powers, including China and the United States, by granting provisional approval to a historic trade deal with Mercosur countries. Touted as the EU's largest trade agreement in terms of tariff reductions, this pact is poised to eliminate over 4 billion euros ($4.7 billion) in duties on EU exports annually.

The agreement, which is still subject to final approval, will remove duties on 91% of EU exports to Mercosur, impacting sectors such as automotive and agriculture. Similarly, the EU will progressively lift duties on 92% of Mercosur exports over the next decade. Despite mixed responses from EU member states, particularly those concerning agricultural imports, the deal is lauded for offering new quotas and opportunities in farm produce exchange and includes geographic indications to protect regional specialties.

While the trade agreement targets economic growth and reduced foreign dependency, critics are raising alarms over potential environmental implications. Friends of the Earth have expressed concerns about increased deforestation risks. No definitive consensus has been reached on environmental enforcement measures, although provisions to suspend preferential access for certain products have been tabled. The next EU budget outlines a 6.3 billion euro crisis fund to support farmers, alongside confirmed reductions in fertiliser import duties.

(With inputs from agencies.)