Today, 17 January, representatives of the European Union and Mercosur signed a free trade agreement at a summit held in Paraguay, creating the world’s largest free trade area.
“The EU–Mercosur agreement is a historic milestone in global trade policy, reaffirming Europe’s ability to shape its own economic and trade relations at a time when protectionism and geopolitical tensions are on the rise,” Foreign Minister Margus Tsahkna said.
According to the minister, the agreement establishes the world’s largest free trade area, home to more than 720 million people. “It will give our businesses better access to one of the world’s largest growth markets and will make the Mercosur region a genuinely accessible target market for industry, services and agriculture alike,” Tsahkna explained.
Tariffs on industrial goods will be reduced for nearly 90% of products, significantly improving the competitiveness of, for example, Estonian machinery, electrical equipment and medical devices. Estonia’s exports of services to Mercosur countries currently amount to approximately €58.5 million, with a large share made up of telecommunications, transport and tourism. All of these sectors will benefit from the liberalisation of the services market.
In agriculture, the agreement will open up a market for Estonian producers that has so far been largely closed, while at the same time preserving EU safeguard mechanisms in the event of market disruption. This ensures a balance between new opportunities and protection for producers.
“The boost in competitiveness gained from the elimination of tariffs will also be supported by Estonia’s plan to open an embassy in Brazil this year. This will strengthen our economic diplomacy presence and help Estonian businesses enter the market,” Tsahkna said.
In Estonia’s view, the EU–Mercosur agreements are in line with EU law, and the existing legal framework provides sufficient clarity and safeguard mechanisms. “We hope that the European Parliament will also be satisfied with the legal clarity of the agreements in a way that does not unjustifiably delay their entry into force,” Tsahkna said.
The interim trade agreement will initially enter into force separately, but following ratification by the member states it will be replaced by a partnership agreement that, in addition to trade, will also address political cooperation in various fields, such as security, sustainable development and scientific cooperation.
On 13 November, the Estonian government decided to support the signing of the partnership and trade agreement between the European Union and Mercosur.
Mercosur is the Southern Common Market of South America – a South American trade bloc established in 1991. Its members are Argentina, Brazil, Paraguay and Uruguay. Together, the Mercosur countries form the world’s sixth-largest economy and are home to a total population of 270 million people.
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