MILAN — After over 25 years of discussions, the council representing European member states authorized the signing of a trade deal with Mercosur that could potentially create the world’s biggest free-trade area.
In a statement, the European Commission said Friday that the EU Council representing its member states adopted two key decisions approving the EU-Mercosur Partnership Agreement and the Interim Trade Agreement between the EU and Mercosur. Mercosur is the South American bloc that includes Argentina, Brazil, Paraguay and Uruguay.
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The European Commission said both agreements will require the consent of the European Parliament, though the interim agreement does not require ratification and will remain in effect until the official trade agreement is ratified. Trade to Mercosur has long been limited due in large part to steep tariffs. The Brazilian market, for example, has until now, been highly protected with an applied customs averaging duty of 13.5 percent, according to the European Commission.
Under the interim agreement, tariff reductions and removal of barriers to cross-border trade in services will begin in the near-term to open access to new markets for a wide range of goods across agriculture, automotive, pharmaceuticals and chemicals.
Mercosur Is Crucial for Luxury
Since U.S. President Donald Trump imposed sweeping tariffs on foreign goods, luxury firms across fashion and design have been banking on a reprieve that hinged on the swift approval of the crucial European Union deal with Mercosur. This deal, for which talks commenced in 1999, covers a market of over 700 million consumers.
The European Commission has said that the main goal of the deal is to increase bilateral trade and investment and lower tariff and non-tariff trade barriers — notably for the sort of small and medium-sized companies that are the backbone of European luxury, agriculture and services companies. The commission also said that the deal could save EU companies 4 billion euros’ worth of export duties a year.
In Italy, fashion and design leaders have said the deal was key amid an ongoing slowdown due in part to China’s declining appetite for European luxury goods and the industry losing loyal customers over rising prices.
