Spain | EU-Mercosur agreement: a strategic opportunity with caveats

Summary

The trade agreement between the EU and Mercosur opens up opportunities for industry and services, although questions remain regarding its impact on certain agricultural and livestock segments, as well as Europe’s ability to manage the trade tensions arising from openness.

Key points

• Key points:
• The agreement will reduce tariffs on 90% of bilateral trade over 15 years, generating annual savings of more than €4 billion for European companies and boosting trade between the two blocs by around 40%.
• Economic literature broadly points to a positive impact from the agreement on growth and bilateral trade. For Spain, estimates suggest a cumulative gain of up to 0.23% of GDP once the agreement is fully implemented.
• Mercosur has become a strategic supplier for Spain of energy, agri-food inputs and critical raw materials. The agreement also strengthens access to key minerals for the energy transition and supports the diversification of European supply chains.
• The impact of the agreement will not be uniform across Spain, but will depend on each region’s productive structure and degree of international integration. The Basque Country, Navarra and Madrid stand out for their industrial export profile towards Mercosur, particularly in capital goods and higher value-added manufactures. By contrast, in Andalusia, Murcia and the Canary Islands maintain a predominantly import-oriented relationship regarding energy, raw materials, and agri-food products from the bloc.

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