In Brussels, Mercosur was able to conclude negotiations for the signing of a Strategic Association Agreement with the European Union, an unprecedented agreement for both blocs and one of the most important in world history. Thus, it culminates a negotiating process that lasted more than 20 years and that gained renewed momentum since 2016.
The Strategic Association between Mercosur and the European Union implies the integration of a market of 800 million inhabitants, almost a quarter of the world's GDP and with more than US$ 100 billion in bilateral trade in goods and services. It is a milestone for Argentina's international insertion as it increases the exports of regional economies, consolidates the participation of our companies in global value chains, promotes the arrival of investments, accelerates the process of technology transfer and increases the competitiveness of the economy, all of which will generate an increase in the Gross National Product and an increase in quality employment. In addition, it constitutes an institutional seal that gives permanent character to the strategic relationship with the EU, guaranteeing transparency, predictability and clear rules for the economic actors.
The agreement reached ensures the main objectives set by the Mercosur countries, since it improves the conditions of access to goods and services for our exports, while allowing a transition time for the commercial opening of European goods and services and preserves industrial development tools in fields such as intellectual property, public procurement and trade defense.
The agreement transcends merely commercial purposes and marks a before and after in Argentina's international integration and in the process of national economic development. It is also the result of an effort of dialogue, coordination and understanding among Mercosur member countries, as well as between their governments and the private sector, chambers of commerce and trade union associations in each of them. It also strengthens Mercosur internally and consolidates and broadens the horizon of its international insertion agenda.
The EU is the leading global investor, with an investment stock exceeding 30% of the world total. It imports 17% of total world purchases of goods and services and represents 20% of the international economy's product. The agreement will provide opportunities to export to a market with more than 500 million inhabitants with an average GDP per capita of USD34,000 and access to a more diverse and higher quality supply of products at more competitive prices for our industries and consumers.
Among the main axes of the agreement are the following achievements for Mercosur:
- It provides greater institutional quality: it establishes a strategic and permanent political, cultural and economic link with the EU. It also presents a transparent and consensual regulation that reduces discretionality in the application of economic policies.
- It improves the competitiveness of Argentina's economy: it streamlines the conditions of access to goods, services and investments, by reducing and eliminating restrictions. At the same time, it simplifies trade procedures, facilitates access to technology, inputs and intermediate goods that are necessary to produce value-added goods.
- It contemplates a transition time: the agreement will be implemented gradually in times that guarantee a process of adaptation of the Argentine economy to international competition. For Mercosur countries, tariff reduction terms will be extended, on average, in periods of 10 and up to 15 years, while the EU accepted immediate tariff reduction terms with Mercosur, a situation unprecedented in other negotiations of the European bloc.
- It favors regional integration: it implies a new stage in the relationship between Mercosur countries, boosting intra-regional trade and assuming new commitments in terms of circulation, regulatory harmonization and simplification of internal procedures.
- It establishes benefits for SMEs: it contemplates special programs that facilitate their integration into global value chains, technical assistance, participation in government procurement, joint ventures, partnerships, business networks, transfer of know-how and financial assistance.
- Promotes the attraction of investment: facilitates the increase of foreign investment by providing certainty and stability in the rules of the game. Other countries or blocs that have signed agreements with the EU have significantly increased FDI inflows.
Source: Argentine Ministry of Foreign Affairs
