On May 1, the EU-Mercosur trade agreement, more than 25 years in the making, will take effect on a provisional basis. The agreement between the European Union (EU)’s 27 member states and four members of the Southern Common Market (Mercosur) – Argentina, Brazil, Paraguay, and Uruguay – will create one of the largest free trade zones on the globe, covering more than 700 million citizens, as governments across Europe and South America seek to hedge against uncertain relationships with major powers.
While the EU is already the largest foreign investor in Mercosur and its second-largest trading partner in goods after China, EU firms still face significant trade barriers in the highly protected Mercosur markets. The goals of the agreement are to lower both tariff and non-tariff trade barriers, create predictability for investment through stronger regulatory practices, and promote shared values in areas such as sustainability and workers’ rights. EU exporters stand to save up to four
