EU and Mercosur Sign Free Trade Agreement Creating Large Trade Zone

EU and Mercosur Sign Free Trade Agreement Creating Large Trade Zone

The European Union and the South American bloc Mercosur have signed a significant free trade agreement in Asuncion, Paraguay. This agreement establishes one of the world's largest free trade zones by reducing over 90% of tariffs between the EU and Mercosur countries, including Argentina, Brazil, Paraguay, and Uruguay.

The European Union and Mercosur have finalised a long-awaited free trade agreement, marking a pivotal moment in international trade relations. Signed in Asuncion, Paraguay, this agreement creates one of the largest free trade zones globally by eliminating more than 90% of tariffs between the EU and Mercosur countries. The agreement is expected to enhance economic, diplomatic, and geopolitical ties, fostering growth and job creation through increased exports.

European Commission President Ursula von der Leyen described the accord as a "geopolitical victory," highlighting the mutual benefits of the partnership. The agreement aims to balance goods trade, which was valued at €111 billion in 2024. However, the deal still requires approval from the European Parliament and ratification by the legislatures of the Mercosur member countries, a process anticipated to be relatively smooth.

Technical Details

The trade agreement between the EU and Mercosur is designed to significantly reduce tariffs, with more than 90% of them being slashed. Some of these tariff reductions will be phased in over a period of 10 to 15 years. The agreement is intended to promote smoother trade and better prices for consumers, as well as to create a more balanced trade relationship between the two regions.

EU Trade Commissioner Maros Sefcovic emphasised the collaborative nature of the agreement, stating that it sends a clear message of support for low tariffs and smooth trade. The deal is seen as a strategic move to enhance the quality and pricing of goods for consumers in both regions. The agreement also reflects a commitment to working together on projects that offer mutual advantages.

Availability

The free trade agreement must now be approved by the European Parliament and ratified by the legislatures of Argentina, Brazil, Paraguay, and Uruguay. This ratification process is expected to proceed smoothly. Brazilian President Luiz Inacio Lula da Silva, a key proponent of the deal, expressed optimism about the agreement's potential impact, despite not attending the signing ceremony.

Story based on discussion on Hacker News.