Mercosur-EU trade deal will face wide opposition

Significance

Twenty years to the day after talks began, the EU and Mercosur announced that a free trade deal had been reached on June 29. The agreement is predicted to save European exporters some 4 billion euros (4.5 billion dollars) in duties annually and to open EU markets to Mercosur agriculture while giving EU companies access to public procurement and manufactures markets in the South American bloc.

Impacts

• Although liberalisation will be gradual, it risks damaging Mercosur industry without putting alternatives in place.
• The structure of the deal could push Mercosur back increasingly into the role of a raw materials exporter.
• Given limited consumer spending capacity in Mercosur, claims of access by EU exporters to a market of 260 million are exaggerated.
• Resistance from EU farmers may prove a deal-breaker.