The European Union has signed a historic trade deal with four of South America's largest economies.
European Commission President Ursula von der Leyen called the deal a “truly historic milestone” in an “increasingly conflictual world.”
A previous agreement from 2019 never came into force because not all EU member states were willing to ratify it.
If this agreement is ratified by EU states, it means that companies trading between the two regional blocs will charge each other lower tariffs, use simplified customs procedures and the EU will have easier access to raw materials.
Ms von der Leyen told journalists in Montevideo that it was in the interest of European citizens. “That means more jobs and good jobs, more choice and better prices,” she said.
Last year, Europe sold nearly $59 billion worth of goods to Argentina, Brazil, Paraguay and Uruguay.
The deal is expected to increase exports of goods, including cars, machinery, chemicals and pharmaceuticals, at a time of rising trade tensions with other parts of the world, particularly the United States and China.
Nearly $57 billion worth of goods were sold in the other direction last year, with minerals such as lithium and nickel as well as meat and vegetables among the biggest sellers.
These minerals are essential to electric vehicle batteries and this trade deal will make it easier for European carmakers to obtain the huge quantities they are expected to need in the coming years.
With the two blocs covering 700 million consumers and around 20% of global economic output, leaders on both sides hope that sum will increase if the deal goes into effect.
The EU says 60,000 of its companies also export to Mercosur members, and half of them are small businesses.
Talks began in 2000. A previous 2019 agreement did not come into force after EU members failed to ratify it due to concerns over environmental protection, including practices sustainable agriculture and deforestation.
Trade policy is negotiated by the European Commission rather than its member states, but France, Italy and Poland have all expressed reservations about the current deal and the challenge for Brussels will be to get them all to ratify it.
French and Polish farmers have expressed concern about being subjected to unfair competition because European rules applicable to their sector are stricter and more costly to comply with than those of their South American competitors.
In a defiant message on social media shortly after the announcement, French Commerce Minister Sophie Primas said: “What is happening in Montevideo does not constitute a signing of the agreement but simply the political conclusion of negotiation. This does not bind the Member States. »
She added that “France will fight at every stage alongside member states who share its vision.”
The possibility of boosting foreign trade will be particularly welcomed by Germany whose exporters are struggling amid a wider economic slowdown.
Government spokeswoman Christiane Hoffmann said the deal was “a unique opportunity to reach an agreement that we must not miss” and that Germany was working to find a compromise over French concerns.
