EU and Mercosur, European Commission

The EU is currently negotiating a trade agreement with the four founding members of Mercosur (Argentina, Brazil, Paraguay, and Uruguay) as part of the overall negotiation for a bi-regional Association Agreement. Venezuela has been a member of Mercosur since 2012 and is an observer in the trade negotiations, but is not a party to the trade negotiations.

Current trade relations between the EU and Mercosur are governed by an inter-regional Framework Cooperation Agreement which entered into force in 1999. In addition, the EU and individual Mercosur countries have bilateral Framework Cooperation Agreements, which also establish a structure for dealing with trade-related matters.

The Mercosur Free Trade Agreement

The EU-Mercosur negotiations re-launched in May 2010. Ten negotiation rounds took place mostly focused on rules (as opposed to market access commitments) before negotiations were paused in 2012.

On 11 May 2016, the EU and Mercosur exchanged offers for the first time since the re-launch, followed by a negotiation round in October 2016. The next round should take place in Brasilia between 2 and 6 October 2017.

The current negotiations cover a broad range of issues including:

• tariffs
• rules of origin
• technical barriers to trade
• sanitary and phytosanitary measures
• services
• government procurement
• intellectual property
• sustainable development
• small- and medium-sized enterprises

This free trade agreement will be part of the overall negotiation for a bi-regional Association Agreement which also comprises a political and a cooperation pillar.

Trade picture

• For the four Mercosur countries negotiating with the EU, the EU is Mercosur's first trading partner, accounting for 21% of the bloc's total trade in 2015.
• The EU's exports to the region have increased from €21 billion in 2005 to €46 billion in 2015. Mercosur's exports have increased from €32 billion to €42 billion over the same period.
• Mercosur's biggest exports to the EU in 2015 were agricultural products, such as foodstuffs, beverages and tobacco (24%), vegetable products including soya and coffee (18%) and meats and other animal products (6%). Other exports include mineral products (14%), wood and paper products (8%) and machinery (5%).
• The EU's exports to Mercosur include machinery (29%), vehicles and parts (17% of total exports) and chemicals and pharmaceuticals (24%).
• The EU is also a major exporter of commercial services to Mercosur (€20 billion in 2014).
• The EU is the biggest foreign investor in the region, rising from €130 billion in 2000  to €387 billion in 2014.
• Mercosur is a major investor in the EU, with stocks of €115 billion in 2014.

EU and Mercosur

Mercosur was established in 1991 and encompasses Argentina, Brazil, Paraguay, Uruguay and Venezuela, which officially joined in July 2012. In December 2012, the Protocol of Accession of Bolivia to Mercosur was signed. This Protocol is pending ratification by all Parliaments in Mercosur countries.

The EU has bilateral Partnership and Cooperation agreements with Argentina, Brazil, Paraguay and Uruguay.

All Mercosur countries, with the exception of Paraguay, no longer benefit from the Generalised Scheme of Preferences (GSP) scheme as of 1 January 2014, due to their classification as high middle-income countries. However, they remain GSP eligible countries.