Brazil, Latin America’s largest economy, has closed a deal with the European Union (EU) for a trade agreement with the Mercosur bloc, the Brazilian government said on Friday. The agreement was closed following two decades of negotiations. Mercosur is made up of Brazil, Argentina, Paraguay and Uruguay.
The two trade blocs account together for 25 percent of the world’s GDP, the Brazilian government said. The EU labeled the agreement as a “political, ambitious, balanced and comprehensive trade agreement.”
“The new trade framework - part of a wider association agreement between the two regions – will consolidate a strategic political and economic partnership and create significant opportunities for sustainable growth on both sides, while respecting the environment and preserving interests of EU consumers and sensitive economic sectors,” the EU said in a statement.
From the perspective of Brazil, the deal will help the nation to extend existing quotas for a number of products. It remains unclear if steel would be included in those products. Additionally, the Brazilian government said it expects to increase its GDP by $87.5 billion in 15 years.
As for the EU, the trade agreement will remove the majority of tariffs on EU exports to Mercosur, “making EU companies more competitive by saving them EUR 4 billion worth of duties per year.”
“As regards EU industrial sectors, this will help boost exports of EU products that have so far been facing high and sometimes prohibitive tariffs. Those include cars (tariff of 35 percent), car parts (14-18 percent), machinery (14-20 percent),” among other products.