After years of negotiations between the European Union and the Mercosur region, a new trade deal is finally in sight. Last week, EU and Mercosur officials met in Asuncion, Paraguay as they resumed talks over the deal. During these negotiations they will tackle some of the remaining contentious areas such as the terms for car imports into the Mercosur region from Europe, one of the key issues for the European Union. Both sides are looking to make progress and are taking steps in order to finalise the EU-Mercosur trade deal. We are about to see the start of a new and exciting commercial partnership between the regions and, as such, investors from both sides can expect to take advantage of the forthcoming lucrative business opportunities, especially given the predicted economic recovery in Latin America in 2018. In this article, we take a look at the relationship between EU and Mercosur and how the trade deal will create new business opportunities. 

What Is the EU-Mercosur Trade Deal?

European Union

The European Union is Mercosur’s biggest trading partner.

Mercosur, a South American trade bloc, is made up of Argentina, Brazil, Paraguay and Uruguay and also counts Bolivia, Chile, Peru, Colombia, Ecuador and Suriname as associated members. The European Union is already Mercosur’s biggest trading partner and they currently do business with each other guided by the principles of the Inter-Regional Framework Corporation Agreement of 1999. This framework was designed to lay the foundations for closer economic ties between the two regions however it has done little to actually facilitate inter-regional trade and trade barriers still remain. The establishment of an official trade deal will eliminate or reduce the current barriers that have discouraged certain investors up until now. Concretely, the deal will bring benefits to small European firms who wish to export more products to the Mercosur region. In addition to this, the trade deal will bring closer cooperation on issues such as worker’s rights and environmental protection as well as an alignment on food safety standards which will ensure the protection of European food and drink products from lower quality imitations.

What Does It Mean for Business?

Business opportunities

The establishment of the EU-Mercosur trade deal will provide new business opportunities in a wide range of areas.

The Mercosur area has a lot of benefits that you should take into account when deliberating whether to do business in the LATAM region. The region is the world’s 7th largest economy and the 5th largest market outside of the EU. On top of this, it boasts a combined population of 260 million consumers with an ever growing middle class with more disposable income and a taste for European products. Once the new trade deal is in place, European investors will be in an opportune position to take advantage of this growing demand for their products. As part of the EU-Mercosur trade deal, many tariffs and other barriers will be eliminated making the process of exporting to Mercosur much easier and less expensive. The following industries in particular are set to reap the benefits of the trade deal:  

  • Cars and car parts
  • Machinery
  • Chemicals
  • Pharmaceuticals
  • Beauty and soap products

Where Can I Find More Information About Doing Business in LATAM?

If you want more information about how to do business in Latin America or the details on how the EU-Mercosur trade deal can benefit you, at the Biz Latin Hub we have an experienced team of local and expat professionals ready to help. Please, contact our CEO, Craig at [email protected] for more information. We are looking forward to providing you with all the help and support that you need to make your business a success in LATAM!

For more information about doing business in LATAM, watch the video below!