EU associations want early ratification of EU-Mercosur agreement

28 Jun '21
3 min read
Pic: Shutterstock
Pic: Shutterstock

A coalition of 13 European business associations, representing different sectors have called for the swift ratification of the EU-Mercosur association agreement. With the political agreement reached already two years ago (June 2019), now is the time to move forward and unlock the manifold mutual benefits that the agreement will deliver, the associations said.

The EU-Mercosur agreement is the largest and most ambitious trade agreement ever negotiated by both sides. It provides regulatory certainty for both trade in goods and services, and establishes better trade links between countries of respectively 440 and 260 million citizens. It also includes the most advanced sustainable development provisions that will foster partnership, help mitigate climate change and bind both sides to effectively implement the Paris Agreement. Moreover, it includes enforceable commitments on workers' rights and environmental protection through a dedicated dispute settlement mechanism.

"Failure to ratify the agreement would leave the EU and Mercosur with fewer instruments to build mutual trust and cooperate to face the biggest challenge of our time. Moreover, non-ratification will lead to Mercosur countries continuing to trade, or even expanding their trade, with other trading partners that have substantially lower environmental and labour standards," the associations said in a joint business statement.

The EU-Mercosur association agreement is very important for both the EU and Mercosur: in 2019, EU-27 exports in goods to Mercosur accounted for €41.2 billion, whereas export in services reached €21.1 billion in 2019. EU27 headquartered firms invested €114 billion in Mercosur markets since 2010, creating 290,000 jobs in Brazil, Argentina, Uruguay and Paraguay.

On the other hand, in 2019, Mercosur countries exported to the EU €35.9 billion in goods and €10.8 billion in services. Mercosur headquartered firms invested €1.7 billion in the EU27, creating more than 7,000 jobs across the continent since 2010.

"The agreement is expected to grow imports from Mercosur by 10.6 per cent and exports to Mercosur by 52.0 per cent, creating jobs and allowing a better flow of goods and services. The challenge of mitigating climate change while maintaining prosperity, is too big to let tariffs limit the affordability of the most sustainable and innovative goods and services. The agreement will not only improve trade in goods and services, but also protect IPRs - including GIs, increase regulatory transparency and alignments, as well as cooperation on standards, including those for future technologies that will be critical to realise a sustainable economy," the statement said.

"Based on assessments by the EU Commission and the London School of Economics, we estimate that the EU-Mercosur Agreement could create up to 390,000 jobs in the EU, resulting from an increase of exports to Mercosur. Moreover, the reduction of tariffs on EU exports to Mercosur will be making EU companies more competitive by saving €4 billion worth of duties per year and the progressive elimination of export restrictions and import duties will allow EU operators to source competitively essential raw materials. This is particularly important since many EU sectors and businesses face current high tariffs of up to 35 per cent while exporting to Mercosur," the statement added.

Euratex—the voice of the European apparel & textile industry, the European Footwear Confederation, COTANCE—the European confederation of the leather industry, and EuroCommerce are among the 13 associations that have issued the joint business statement.

Fibre2Fashion News Desk (RKS)

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