What Happened: After nearly 20 years of negotiations, the European Union and the Common Market of the South (Mercosur) have agreed to a draft trade agreement, Reuters reported June 28. According to the European Commission's press release, Brussels has agreed to open access to Mercosur agricultural products under quotas to prevent South American producers from undercutting their European counterparts.
Why It Matters: The deal has the potential to expand opportunities for trade between the European and South American trade blocs — the latter of which has historically been a difficult market for exporters to break into due to Mercorsor's high tariff barriers. However, the agreement must still be ratified unanimously by both Mercosur and EU member states, which will give European countries who've opposed the deal — namely, France, Poland and Ireland — ample room to press for the renegotiation of the agreement's agricultural quotas.
Background: The draft agreement will boost exports of European automobiles, car parts, chemicals, pharmaceuticals and clothing and footwear to Mercosur states. The Mercosur countries (which include Argentina, Brazil, Paraguay and Uruguay) have also agreed to provide preferential treatment for EU agricultural products and processed foods, including chocolate, wine, spirits and soft drinks.
- Brazil's Next President Is Looking to Shake Up Mercosur (Nov. 30, 2018)
- Mercosur: Challenges Ahead for EU Free Trade Deal (Sept. 16, 2016)