At a ministerial meeting held on June 27th and 28th, in Brussels, the negotiation of the commercial part of the Association Agreement between MERCOSUR and the European Union (EU) was concluded. Participating for Brazil were the Minister of Foreign Affairs, Ernesto Araújo, the Minister of Agriculture, Livestock and Supply, Tereza Cristina, and the Special Secretary of Foreign Trade and International Affairs of the Ministry of Economy, Marcos Troyjo.
The agreement is a historic milestone in the relationship between MERCOSUR and the European Union, which together represent around 25% of world GDP and a market of 780 million people. At a time of tension and uncertainty in international trade, the conclusion of the agreement highlights the commitment of the two blocs to economic openness and strengthening competitiveness conditions.
The trade agreement with the EU will constitute one of the largest free trade areas in the world. Due to its economic importance and the scope of its disciplines, it is the broadest and most complex agreement ever negotiated by MERCOSUR. It covers both tariff and regulatory topics, such as services, government purchases, trade facilitation, technical barriers, sanitary and phytosanitary measures and intellectual property.
With the agreement in force, agricultural products of great interest to Brazil will have their tariffs eliminated, such as orange juice, fruits and instant coffee. Brazilian exporters will obtain expanded access, through quotas, for meat, sugar and ethanol, among others. Brazilian companies will benefit from the elimination of tariffs on the export of 100% industrial products. In this way, competition conditions will be equalized with other partners that already have free trade agreements with the EU.
The agreement will recognize several products as distinctive of Brazil, such as cachaças, cheeses, wines and coffees.
The agreement will guarantee effective access in various service segments, such as communication, construction, distribution, tourism, transport and professional and financial services. In public procurement, Brazilian companies will gain access to the EU bidding market, estimated at US$ 1.6 trillion. The commitments made will also speed up and reduce the costs of import, export and transit procedures for goods.
The agreement will increase the competitiveness of the Brazilian economy by guaranteeing, for national producers, access to inputs with a high technological content and at lower prices. The reduction of barriers and greater legal security and transparency of rules will facilitate Brazil's insertion into global value chains, generating more investments, jobs and income. Consumers will also benefit from the agreement, with access to a greater variety of products at competitive prices.
According to estimates by the Ministry of Economy, the MERCOSUR-EU agreement will represent an increase in Brazilian GDP of US$ 87.5 billion in 15 years, reaching US$ 125 billion if the reduction of non-tariff barriers and the expected increase in total productivity are taken into account. of production factors. The increase in investments in Brazil, in the same period, will be in the order of US$ 113 billion. Regarding bilateral trade, Brazilian exports to the EU will present almost US$ 100 billion gains by 2035.
The EU is MERCOSUR's second trading partner and the first in terms of investment. MERCOSUR is the EU's eighth largest extra-regional trading partner. The bi-regional trade flow was more than US$ 90 billion in 2018. In 2017, the EU's investment stock in the South American bloc amounted to around US$ 433 billion. In 2018, Brazil recorded trade of US$ 76 billion with the EU and a surplus of US$ 7 billion. Brazil exported more than US$ 42 billion, approximately 18% of the country's total exports. Brazil stands out as the largest destination for foreign direct investment (FDI) from EU countries in Latin America, with almost half of the investment stock in the region. Brazil is the fourth largest destination for FDI in the EU, which is distributed in sectors of high strategic value.
Post: Marina Carvejani
Author: Laís Martins
Source: Notícias Agrícolas
