The EU has concluded bilateral partnership and cooperation agreements with Argentina, Brazil, Paraguay and Uruguay. Mercosur countries no longer benefit from the Generalised System of Preferences (GSP) because of their classification as high-middle-income countries. The Union`s highest decision-making body, the Council of the Common Market, is a high-level forum for the coordination of foreign and economic policy. The chairman of the group changes every six months among its full members in alphabetical order. The other bodies are the Common Market Group, which coordinates macroeconomic policy; a commercial commission; a parliament, known as Parlasur, which has an advisory function; and the Structural Convergence Fund, which coordinates regional infrastructure projects. The way the deal was negotiated raises several important governance issues that ClientEarth`s lawyers raised at a new briefing. Here we set out what these problems are and why they need to be addressed if the EU is to meet its global commitments to sustainable trade. The EU has an equivalent ad valorem high out-of-quota MFN tariff on beef and beef products of around 60%. Under the agreement, the EU will market 99,000 tonnes of beef (55% high-quality fresh beef and 45% frozen beef) with a 7.5% tariff and remove the quota rate for the World Trade Organisation`s „Hilton“ quota. (For more information, see the FAS report Comparing EU tariff rate quotas for high-quality beef.) On the EU market, the US competes with the Mercosur countries for the export of a significant number of agricultural and related products. Although the analysis of each product is beyond the scope of this document, a preliminary analysis identifies nearly $4 billion in the United States. Products potentially threatened by MERCOSUR competition and tariff reductions under the new EU-MERCOSUR trade agreement.

Agricultural products from the US and the EU already account for a significant share of MERCOSUR`s imports, but most products do not overlap. From 2015 to 2019, nearly 60% of US exports to MERCOSUR were soybeans and ethanol, which the EU does not export in significant quantities. During the same period, the EU exported a wide range of high-quality products, including olive oil, food preparations, wine and distilled spirits. The agreement will reduce potential export opportunities for intermediate products and consumer goods processed in the United States at MERCOSUR. The EU-Mercosur trade agreement: impact on climate, food security, pesticides and public procurement, 07.12.2020 Experts say integration has been further stifled as Mercosur economies continue to resort to protectionist measures [PDF] and show their reluctance to create regional value chains or production centres. Instead, Latin America`s traditional dependence on low-value-added commodity exports, particularly to China, continued during the commodity price spike of the 2000s. Many economists argue that this has contributed to the disappointing growth of trade within the bloc, which has declined since 1998 as a proportion of total members` trade. The agreement will remove 93% of tariffs on MERCOSUR exports to the EU while granting preferential treatment to the remaining 7%. Similarly, the agreement removes tariffs or creates tariff quotas for the EU`s main agricultural exports to MERCOSUR. In addition, the agreement provides for the protection of more than 350 geographical indications (GIs), recognises the principle of regionalisation and adopts language on EU food safety and health protection standards, including the „precautionary principle“.

Although no definitive tariff plan has yet been published, a preliminary analysis based on alleged tariff reductions and tariff quotas shows that US agricultural products competing with MERCOSUR and EU products will be at a significant disadvantage. Member States may value goods from these territories with the common external tariff used for Mercosur goods or, in the case of certain special products, with the internal tariff applicable in each individual State. In this way, products from free zones may be subject to the tax arrangements provided for in the framework of the southern common market, which is granted to goods produced in the normal customs zones of each Member State, or, for certain special products, the usual customs treatment in each country may apply. Products from outside Mercosur are heavily taxed, so local companies do not feel the need to compete with large international companies. Following the impeachment of President Fernando Lugo by the Paraguayan Senate, the country was suspended by Mercosur and Venezuela`s admission as a full member entered into force on 31 July 2012. [5] Venezuela has had four years to fully adapt to the regulations of the trading bloc and has not done so, as the nation was suspended by Mercosur on December 1, 2016. [28] Regional integration began to slow down after the devaluation of the Brazilian currency in 1999 and the Argentine financial crisis in 2001, and since then trade disputes and other tensions between the two countries have erupted. In 2011, Argentina cancelled automatic licensing for hundreds of imports, leading to delays in ports and contributing to a 15 percent drop in Brazilian exports the following year. However, Mercosur economies have recently signaled their willingness to open up to other markets and conclude a historic trade deal with the European Union in 2019 after lengthy negotiations. If ratified, it would be the largest free trade agreement in the world.