Austrian Federal Chamber of Commerce and EU-Mercosur Agreement

Well-done fair international trade is a powerful lever to sustainably strengthen and secure prosperity and jobs in Austria and Europe, especially in economically challenging times, said the Austrian Federal Chamber of Commerce (WKÖ).

The Association Agreement between the European Union and the MERCOSUR countries (Argentina, Brazil, Paraguay and Uruguay) includes provisions on political dialogue, cooperation and trade. On June 28, 2019, after nearly 20 years of negotiations, an agreement was reached on the trade part.

The agreement is currently undergoing formal legal review. Following this, the agreement will be translated into the official European languages and submitted to the Council of the European Union and the European Parliament for approval. If they approve, the ratification process can begin. As part of the ratification process, all national parliaments must approve the agreement.

WKÖ lobbies for an agreement and sees the perfect time window to use the Mercosur agreement in times of the current crisis. This is the first trade agreement ever to be concluded by MERCOSUR.

“After the election in Brazil, now would be an excellent time to bring the already negotiated agreement between the Mercosur countries and the EU towards implementation. Both sides would benefit from this,” explained WKÖ Secretary General Karlheinz Kopf. Precisely because the EU would be the first region to conclude an agreement with the economic region in South America, the agreement holds a great opportunity for the EU – “also in the sense that, especially in economically uncertain times, the diversification of sales and procurement markets is an imperative,” said the WKÖ Secretary General.

“Experience teaches that trade agreements have led to a deepening of trade relations. More exports mean more jobs,” Kopf said. For the approximately 1,400 Austrian export companies and their employees, the agreement would in any case bring a tangible competitive advantage through a reduction in customs duties, simplifications in product certifications and the opening of the public procurement market as well as the services market of the Mercosur countries. It should also be noted that the high European standards in the social, environmental and food sectors are further ensured by the Mercosur Agreement. The agreement also contains a clear commitment to the Paris Climate Agreement, to the reforestation of the rainforest and to act against illegal slash-and-burn.

“Especially an export nation like Austria is dependent on an active European trade policy that enables market access in growth regions and creates fair competition and trade rules. The economic agreement with the Mercosur countries would be a step in the right direction,” Kopf concludes.

EU-Mercosur agreement creates the world’s largest free trade area

The agreement will create the world’s largest free trade area with a population of over 770 million (EU 512 million / MERCOSUR 260 million), according to the German Federal Foreign Office. Argentina, Brazil, Paraguay and Uruguay are important sales markets for the European economy.

According to the German Federal Foreign Office, the EU is MERCOSUR’s largest trade and investment partner. EU companies already have 380 billion euros invested in the MERCOSUR countries. The volume of trade between the EU and MERCOSUR amounted to around 88 billion euros in 2018, according to the German Federal Foreign Office.

The agreement is thus an important cornerstone for closer economic cooperation. It opens up opportunities for EU companies to participate to a greater extent in the region’s dynamic economic development. Innovative small and medium-sized enterprises in particular will gain greater legal certainty in their entrepreneurial activities as a result of the agreement.

Mercosur States

Mercosur is an international economic organization in Latin America. The name is the abbreviated name for the Mercado Común del Sur (Southern Common Market).

In addition to promoting free trade, Mercosur also promotes the fluid movement of people, goods, and currencies. Many of Mercosur’s functions have been updated and amended over the years; it currently consists of a customs union with free intra-zone trade and a common trade policy among members.

The organization was constituted by the signing of the Treaty of Asunción on March 26, 1991. It is a single market of more than 260 million people that currently covers 12.8 million square kilometers, which is approximately 72% of the area of South America or 56% of the area of Latin America.

Mercosur has a gross domestic product of about one trillion U.S. dollars (about 75% of the total GDP of the Latin American continent), in foreign trade the value of exports is about 200 billion U.S. dollars and imports about 130 billion dollars.

WKO Austrian Federal Chamber of Commerce

German Federal Foreign Office

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