The European Union and Mercosur - the Common Market of South America founded in 1991 by Argentina, Brazil, Paraguay and Uruguay - have reached a commercial agreement at the end of the long negotiations started in 1999. The European Union is the first partner to conclude a commercial agreement with Mercosur, thus creating the largest trade block in the world: 773 million inhabitants, an annual interchange of 88 billion euros for goods and 34 billion euros for services and a total GDP of 19 thousand billion euros. It is also estimated that European companies will save over 4 billion euros a year thanks to the elimination of commercial duties currently in force between the two blocks. The main points of the agreement are summarised below.
Market access: the agreement will eliminate 91% of current commercial duties. The Mercosur countries will eliminate the duties currently in force on many industrial products such as cars (current duty at 35%), car parts (duties 14% -18%), machinery (duties 14% -20%), chemicals (duties up to 18%), pharmaceutical products (duties up to 14%), clothing and footwear (duties at 35%). The duties in force on some food products such as wines (current duty at 27%), sweets (20% duty), alcohol and non-alcoholic drinks (duties 20-35%) will be progressively eliminated. The European Union will eliminate 92% of the duties currently in force on products imported by Mercosur.
Services: the Agreement will facilitate European companies' access to the Mercosur services market. The services that will be liberalized include postal services, telecommunications and financial services. Provisions have been included in the Agreement on the free circulation of professional figures such as managers and specialists that European companies can send to their branches in Mercosur countries.
Public procurement: for the first time, the Mercosur countries will make their public procurement market accessible to European companies, which will be able to present offers for contracts with public authorities, such as for example the central government ministries and other governmental and federal agencies, on equal terms with local businesses. The EU has recognized Mercosur companies' access to the public procurement market at central level (EU institutions and central government administrations in the Member States)
Intellectual property: European Union and Mercosur will protect intellectual property rights such as copyright, design, trademarks and geographical indications. The Agreement contains a specific chapter on the protection of trade secrets. Over 350 European geographical indications - including wines, beers and alcoholic beverages - will be protected in Mercosur. The Union will in turn protect the typical geographical indications of Mercosur such as the Brazilian Cachaça and the Argentine Mendoza wine.
SMEs: in both Mercosur and the European Union, most companies are SMEs. The agreement requires both parties to provide information on market access on a dedicated website for SMEs and the creation of an "SME coordinator" in order to help these companies benefit from the opportunities offered by the agreement.
The agreement will come into force once approval has been obtained from the Member States of the European Union and the European Parliament and Mercosur Member States.