Today, 9 January, the Council of the European Union approved the signing of the free trade agreement between the EU and Mercosur. The formal signing of the agreement will take place next week in Paraguay.
“This is a historic moment in many respects – these negotiations began back in 1999, more than 25 years ago, and with this decision, the world’s largest free trade area will be created on Monday in Paraguay, of which Estonia will also be a part,” Foreign Minister Margus Tsahkna said.
According to the minister, the agreement will strengthen Estonia’s economic security and give our businesses the opportunity to enter the Latin American market on far more favourable terms than before. “According to various analyses, as a result of the agreement Estonia’s exports to Mercosur countries could increase by nearly 8 per cent. Equally important are the indirect benefits – if our European trading partners perform well thanks to increased exports, Estonia’s economy will also benefit,” Tsahkna explained.
A European Commission report published last year confirms that exports of goods to countries with which the European Union has concluded free trade agreements grew twice as fast in 2024 as exports to countries without such agreements. In the case of services, the difference is almost threefold, and the same pattern can be seen for agricultural products.
“Exports of EU agricultural products grow more consistently and more rapidly in markets where tariffs have been reduced or eliminated through agreements. This increases the competitiveness of European, including Estonian, farmers compared with countries with which the EU has no such agreements,” the foreign minister said.
For the agricultural sector, which has been the most sensitive issue in relation to this agreement, the European Union has put in place strong safeguard mechanisms. The European Parliament and the member states have approved new, faster-acting market protection measures that make it possible, if necessary, to temporarily suspend tariff preferences in sensitive sectors such as beef, poultry and sugar. This is a safety net that ensures European farmers are not left alone in the winds of global competition.
According to Tsahkna, the agreement also has a strategic dimension. “In a world where trade and geopolitical power dynamics are changing rapidly, the Mercosur agreement helps Estonia and the European Union as a whole to diversify their economic relations, reduce dependence on individual partners and strengthen supply chains. This is a step that reinforces Europe’s role in the global economy and creates new opportunities for the decades to come,” the foreign minister affirmed.
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.
More information and statistics: https://www.consilium.europa.eu/en/infographics/eu-mercosur-trade/
Additional information
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