Latam | The Mercosur-European Union agreement: A historic opportunity

Summary

After more than 25 years of negotiations, Mercosur (Argentina, Brazil, Uruguay, Paraguay) and European Union (EU) reached an association agreement in December 2024— a turning point in the history of both regions. It is currently undergoing legal review, and a provisional implementation is expected by the beginning of 2026.

Key points

• Key points:
• With a combined population of 770 million people and 25% of global GDP, the free trade agreement makes up one of the largest economic zones in the world.
• It eliminates more than 90% of bilateral tariffs and also creates a transparent and predictable legal framework that will foster trade, foreign direct investment (FDI) and political and regulatory ties between the two regions.
• For its part, the EU will eliminate tariffs on 92% of its imports from Mercosur almost immediately. In turn, Mercosur will do the same with 91% of European imports, but with a staggered schedule that includes maturities of up to 30 years for sensitive sectors.
• Among the benefits for the EU is preferential access to a market of more than 270 million people, with a wealth of natural resources and industrial opportunities.
• Regarding investments, a strong boost to FDI from Europe to South America is expected. The EU is currently Mercosur’s main investor, with a stock of more than 340 billion euros.

Geographies

Topics

Tags