"This agreement will benefit people and businesses. More jobs, more opportunities, shared prosperity," the German politician wrote on the X network after the pact. Mercosur includes Brazil, Argentina, Paraguay, Uruguay and Bolivia, which will form a free trade area with the EU with a population of 700 million people.

Since this historic agreement is the biggest the EU has ever reached and the only one Mercosur has with a significant trading bloc, European goods will be able to access its market on far more favourable terms than those of the US or Japan. In addition to giving South American products privileged access to European markets—particularly for agricultural goods where Mercosur has a significant competitive advantage—it removes tariffs on more than 90% of bilateral commerce, saving European exporters EUR 4 billion yearly.

European businesses will also have easier access to Mercosur's high-value service industries, public procurement markets, and vital raw minerals like lithium. In exchange, the EU will lower tariffs on imports, including agricultural items, and provide EUR 1.8 billion through the Global Gateway program to help Mercosur's digital and green transition.

Beyond the financial components, the agreement strengthens adherence to the Paris Climate Agreement and contains pledges to uphold high labour standards. The accord also includes measures to reduce deforestation, a major objective of the European Union. By lowering tariff and non-tariff obstacles, promoting growth and prosperity, especially for small and medium-sized businesses, and establishing a predictable economic environment, the agreement aims to boost trade and investment overall.

Source:https://www.csis.org/ 

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