The signing of a new political agreement with Mercosur after a wait of more than 20 years, the European Union has hailed the move as an important tool in the strategic partnership of both sides.
With this agreement, EU has become the first major partner to sign a trade pact with South America bloc comprising Argentina, Brazil, Paraguay and Uruguay.
European Commission describes the agreement as ‘a clear commitment from both regions to rules based international trade which will give European companies an important head start into a market with an enormous economic potential.’
The current EU bilateral trade with Mercosur already totals 88 billion euros a year for goods and 34 billion euros for services. The deal inked will create a market of close to 800 million people for goods and services comprising almost a quarter of the world’s gross domestic product. Besides estimated tariff reduction of 4 billion euros a year on EU exports to Mercosur, the trade pact will also provide access to public procurement contracts, protection for regional food specialities and greater freedom to provide services.
Germane to mention here that EU face high tariffs on clothing and footwear, about 35 per cent and 26 per cent on knitted fabrics.
President of the European Commission Jean-Claude Juncker said, “I measure my words carefully when I say that this is a historical moment. In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade. Through this trade pact, Mercosur countries have decided to open up their markets to the EU.”
Following the signing, a legal revision of the agreed text will be performed with the final version of the Association Agreement and all its trade aspects. The Commission will then translate it into all official EU languages and submit the Association Agreement to EU Member States and the European Parliament for approval.
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