We, the coalition of European business associations representing different European sectors call for the swift ratification of the EU-Mercosur association agreement. With the political agreement reached already 2 years ago (June 2019),now is the time to move forward and unlock the manifold mutual benefits thatthis agreement will deliver.
The EU-Mercosur agreement
- is the largest and most ambitious trade agreement ever negotiated by bothsides, provides regulatory certainty for both trade in goods and services, andestablishes better trade links between countries of respectively 440 and 260million citizens. The agreement will unlock growth and help both regions torecover from the current economic and public health crisis, invest in the greentransition and diversify global supply chains and our core market base.
- includes the most advanced sustainable development provisions that willfoster partnership, help mitigate climate change and bind both sides toeffectively implement the Paris Agreement. Unilateral legislative initiatives atEU level, such as upcoming initiative on deforestation and the review ofexisting rules on timber trade and fight against illegal logging will enhance thiscooperation and effectively ensure that exports to the EU will not contribute todeforestation or soil degradation.
- includes enforceable commitments on workers' rights and environmentalprotection through a dedicated dispute settlement mechanism that includesan active role for civil society organisations and calls on the expertise ofinternational bodies, whose reports and recommendations must be madepublic. In case of non-respect of any of these provisions an automaticmechanism will trigger formal government consultations.
Failure to ratify the agreement would leave the EU and Mercosur with fewerinstruments to build mutual trust and cooperate to face the biggest challenge ofour time. Moreover, non-ratification will lead to Mercosur countries continuingto trade, or even expanding their trade, with other trading partners that havesubstantially lower environmental and labour standards.
The EU-Mercosur association agreement is very important for both the EU andMercosur: in 2019, EU-27 exports in goods to Mercosur accounted for €41.2 billion ,whereas export in services reached €21.1 billion in 2019 . EU27 headquartered firmsinvested €114 billion in Mercosur markets since 2010, creating 290,000 jobs inBrazil, Argentina, Uruguay and Paraguay .
On the other hand, in 2019, Mercosur countries exported to the EU €35.9 billion ingoods and €10.8 billion in services. Mercosur headquartered firms invested €1.7 billion in the EU27, creating more than 7,000 jobs across the continent since2010 .
The agreement is expected to grow imports from Mercosur by 10.6% and exportsto Mercosur by 52.0%, creating jobs and allowing a better flow of goods andservices . The challenge of mitigating climate change while maintainingprosperity, is too big to let tariffs limit the affordability of the most sustainableand innovative goods and services. The agreement will not only improve trade ingoods and services, but also protect IPRs - including GIs, increase regulatorytransparency and alignments, as well as cooperation on standards, including thosefor future technologies that will be critical to realise a sustainable economy.
Based on assessments by the EU Commission and the London School ofEconomics, we estimate that the EU-Mercosur Agreement could create up to390,000 jobs in the EU, resulting from an increase of exports to Mercosur .Moreover, the reduction of tariffs on EU exports to Mercosur will be making EUcompanies more competitive by saving €4 billion worth of duties per year and theprogressive elimination of export restrictions and import duties will allow EUoperators to source competitively essential raw materials . This is particularlyimportant since many EU sectors and businesses face current high tariffs of up to35% while exporting to Mercosur.
Furthermore, transparency will allow civil society groups to build up evidence-based pressure on the side not respecting their commitments, further helping toensure that sustainable development provisions are respected.
The EU-Mercosur Association Agreement provides a unique opportunity tocontribute to the economic recovery of the EU by creating a clear legal frameworkfor new market opportunities for goods and services, creating jobs and fosteringinvestments. The agreement would provide an avenue for cooperation betweentwo significant global markets to realise a sustainable economy. Walking awayfrom this agreement will limit our ability to cooperate effectively to solve the bigglobal challenge of our time.
We thank you in advance for giving due consideration to our call and remain at your disposal for any further information and to build on an effectiveimplementation of the full agreement.
28 June 2021