What's Happening?
The European Union is prepared to provisionally implement a comprehensive free trade agreement with the Mercosur group of South American countries, according to European Commission President Ursula von der Leyen. This decision comes despite a recent vote
by the EU parliament to delay ratification pending a legal review by the European Court of Justice. The agreement, which aims to eliminate over 90% of tariffs on goods such as Argentine beef and German cars, is seen as a strategic move to diversify trade relations beyond the United States. The EU's readiness to proceed is contingent upon at least one Mercosur country ratifying the deal. The agreement is supported by South American cattle-raising nations and European industrial sectors, but faces opposition from France, which seeks stronger protections for its farmers.
Why It's Important?
The provisional implementation of the Mercosur trade deal is significant as it represents a strategic shift in the EU's trade policy, aiming to reduce dependency on the United States. This move could potentially create one of the world's largest free trade zones, benefiting over 700 million consumers by making goods cheaper. The deal is crucial for South American economies like Argentina and Brazil, which are eager to expand their export markets. However, the agreement faces criticism from agricultural sectors in Europe, particularly in France, which fears increased competition for its farmers. The EU's decision to proceed with the deal could also set a precedent for future trade agreements, influencing global trade dynamics.
What's Next?
The next steps involve waiting for at least one Mercosur country to ratify the agreement, which would trigger the EU's provisional implementation. Meanwhile, the European Court of Justice will conduct a legal review, delaying the EU parliament's final ratification vote. This process could take several months, during which time opposition from countries like France may intensify. The EU's decision to move forward could provoke political debates within member states, potentially impacting future trade negotiations. Additionally, the outcome of the legal review could influence the EU's approach to similar agreements with other regions, such as the anticipated accord with India.
