Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

EU, Mercosur strike trade pact, defying protectionist wave

EconomyJun 29, 2019 01:29AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Argentina's President Mauricio Macri speaks next to leaders during a news conference at the G20 summit in Osaka

By Philip Blenkinsop and Leika Kihara

BRUSSELS/OSAKA (Reuters) - The European Union and South American bloc Mercosur agreed a free trade treaty on Friday, concluding two decades of talks and committing to more open markets in the face of a rising tide of protectionism.

The EU becomes the first major partner with which Mercosur has struck a trade pact, offering EU firms a potential head start. The European Union is already Mercosur's biggest trade and investment partner and its second largest for goods trade.

The two regions launched negotiations exactly 20 years ago and stepped up efforts to reach an accord after Donald Trump's presidential victory led the Europeans to freeze talks with the United States and seek other global trading allies.

The opening to Europe also offers more avenues for development in South America, which has been tugged in recent years between the ascent of top trading partner China and enduring U.S. influence in the region.

"This deal delivers a real message in support of open, fair, sustainable and rule-based trade because trade creates jobs for all concerned," European Commission President Jean-Claude Juncker told a news conference in Japan's western city of Osaka.

He was among the European leaders and Argentine President Mauricio Macri, gathered for the Group of 20 summit, who shared a podium at the event.

"This deal promotes our values and supports a multilateral, rules-based system," Juncker said, adding that the commitment spoke a "lot, louder than 1,000 communiques".

His remarks came as some G20 leaders signaled difficulty in efforts to draft a summit communique, with disagreements ranging from trade to climate change. The deal stands in contrast to the Trump administration's aversion to multilateralism.

The EU's drift away from the United States has spurred on a free trade deal with Canada and helped to reach accords with Japan and Mexico.

Now, after some 40 rounds of talks, the Europeans have reached a provisional deal with the trade bloc founded by Argentina, Brazil, Paraguay and Uruguay.

The EU and Mercosur are together responsible for 720 million people and a quarter of global gross domestic product, says the government of Brazil, whose president, Jar Bolsonaro, hailed the deal on Twitter as historic and one of the most important trade pacts of all time.

If ratified, the deal will be a victory for Bolsonaro, whose right-wing politics face a chilly reception in much of the world, as well as Argentine President Mauricio Macri, who is battling for reelection this year amid a steep recession.


In terms of tariff cuts, the trade deal could be the EU's most lucrative to date, with about 4 billion euros ($4.55 billion) of duties saved on exports, four times more than its deal with Japan.

Europe has its eyes on greater access for manufactured goods, notably cars, which face tariffs of 35%. It wants its firms freed to compete for public tenders, and to sell more wine and cheese. Mercosur aims to boost exports of farm commodities.

Brazil said the pact would remove import tariffs on several farm products, such as orange juice, instant coffee and fruit. It will also get a new 99,000-tonne quota of beef at a 7.5% tariff, phased in over five years, and tariff-free 180,000-tonne quotas each of sugar and poultry.

"It is true that the agreement will make us compete with the best, but the agreement gives us room to maneuver," Miguel Braun, Argentina's economic policy secretary, said on Twitter.

"Europe will eliminate the bulk of its barriers in five years, and Mercosur will apply a gradual tariff reduction over a period of up to 15 years, which will allow the private sector to adapt."


Before it takes effect, the deal needs final approval from Mercosur, the European Parliament and constituent countries, which Brazil's government has conceded could take years.

France is one of the European countries expressing concern about a surge in beef imports, while environmental groups, whose influence is stronger in the new European Parliament, say the pact could worsen deforestation.

The parties both committed to adopt the Paris climate change pact and a special chapter on sustainable development will cover issues such as forest conservation and labor rights.

EU Agriculture Commissioner Phil Hogan said he recognized the concerns of farmers, including those from his country, Ireland, but that the bloc's free trade pacts were opening markets for EU farmers.

($1=0.8794 euro)

EU, Mercosur strike trade pact, defying protectionist wave

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email