The free trade agreement between the EU and South American Mercosur states will soon be applied, despite a pending review by the Court of Justice of the European Union. This was announced by EU Commission President Ursula von der Leyen in Brussels. The two Mercosur states Uruguay and Argentina had previously ratified the agreement on Thursday, paving the way for this step.
The provisional application will allow companies in the EU and from Uruguay and Argentina to benefit from attractive new customs rules and other benefits before the agreement formally enters into force. This is particularly relevant because the formal entry into force could take months or longer due to the European Parliament. In January, it decided with a narrow majority to have the agreement reviewed by the European Court of Justice before a final vote.
Judges examine agreements
How long it will take for the Luxembourg judges to submit their assessment is unclear. There are no maximum deadlines. From Luxembourg it was said that the last expert opinions lasted between 16 and 26 months.
Opponents of the agreement criticize that it was designed in such a way that the free trade agreements did not have to be approved by member states with unanimity. There are also fears that EU standards in consumer protection, the environment and animal welfare could be compromised – which the EU Commission categorically rejects.
Opportunities for European car and pharmaceutical manufacturers
The Mercosur deal was signed in Paraguay at the beginning of the year after more than 25 years of negotiations against the will of states such as France and Poland. This is intended to create a new free trade zone with around 720 million inhabitants. The aim is to stimulate the exchange of goods and services by reducing trade barriers and tariffs. Particularly great opportunities are seen for the automotive industry, mechanical engineering and the pharmaceutical industry. For example, a tariff of 35 percent is currently due on car imports into the Mercosur countries.
In addition to Uruguay and Argentina, Brazil and Paraguay are also part of the agreement. They will also be able to benefit from provisional application once they have completed the national consent process.
Symbol against Trump’s protectionism
The new free trade zone is also seen as a sign against US President Donald Trump’s protectionist tariff policy. Von der Leyen said it was “a platform for deep political engagement with partners who see the world the way we do and who believe in openness, partnership and good faith – partners who understand that open and rules-based trade delivers positive outcomes for everyone.” Mercosur embodies the spirit in which Europe acts on the global stage. “Europe is becoming stronger and more independent,” she added.
Protection against agricultural dumping prices
There was resistance to the agreement in Europe, especially from the agricultural lobby. This sees competition from the Mercosur states as a threat to the existence of European agriculture. In South America, agricultural products such as beef can be produced more cheaply than in Europe.
In order to persuade enough member state governments to support the agreement, extensive additional protection mechanisms for farmers have been created in recent months. In the event of a harmful increase in imports from the Mercosur countries or an excessive fall in prices for EU producers, countermeasures should be able to be taken quickly. These would lead to tariff advantages being temporarily suspended again.
