Free Trade Agreement Mercosur Europe

The free trade agreement between Mercosur and Europe continues to be a topic of discussion in the world of international trade. The agreement, which was negotiated for over 20 years, has sparked both optimism and criticism from different angles.

What exactly is the Mercosur-Europe free trade agreement?

Mercosur is a South American trading bloc consisting of Argentina, Brazil, Paraguay, and Uruguay. The European Union has been negotiating with Mercosur for decades, but the negotiations became more serious in 2016, and on June 28, 2019, both parties reached an agreement.

The free trade agreement will result in the elimination of tariffs on many goods and services traded between the two blocs. The deal will cover 770 million consumers and will create a market worth over $19 billion. The free trade agreement is primarily focused on agriculture, with European farmers expected to gain increased access to the Mercosur market, and South American countries expected to gain increased access to the European market.

What are the possible benefits of the free trade agreement?

Proponents of the agreement believe that it will create jobs and economic growth in both regions. The deal will facilitate increased trade and investment, which will lead to increased competitiveness and productivity. According to the European Union, the agreement will result in savings of over $4 billion a year for European companies trading with Mercosur. For South American countries, the deal provides an opportunity to diversify exports, which are currently heavily focused on raw materials such as minerals and food.

What are the possible drawbacks of the free trade agreement?

Critics of the deal believe that it will lead to environmental destruction and the displacement of small farmers in South American countries. The South American beef industry is expected to be a significant beneficiary of the agreement, leading to deforestation and an increase in greenhouse gas emissions. In addition, small farmers in South America may not be able to compete with larger European producers, leading to the displacement of rural communities.

What`s the future outlook?

The free trade agreement still needs to be ratified by both sides, and it is unclear when it will come into effect. However, the process of ratification is likely to be lengthy and complex, given the current political climate in Europe and South America.

In conclusion, the Mercosur-Europe free trade agreement is a significant development in international trade. While it presents clear opportunities for economic growth, it is important that the potential environmental and social impacts are taken into account. Ultimately, the success of the agreement will depend on its implementation and the willingness of both parties to work together.