Two months after a landmark EU-Mercosur free trade agreement went into provisional effect on May 1, the EU has unexpectedly introduced import quotas on South American finished steel products, breaching the earlier agreement for unspecified reasons, media reports indicate.
The quotas apply to finished steel products from South American (Mercosur) countries after the two blocs signed the historic free trade agreement on Jan. 17 this year.
The breach of the agreement was made without prior negotiations with Mercosur members Argentina, Brazil, Paraguay and Uruguay, or with associated countries Bolivia, Chile, Colombia, Ecuador and Peru.
According to local press reports, the EU has granted Brazil an annual quota of 227,000 metric tons (mt) of finished steel products, while slabs and billets will remain exempt from import tax.
Marco Polo Melo Lopes, executive president of the Brazilian Steel Institute, was quoted by newspaper Valor Econômico as saying that “Negotiations are still ongoing because the EU proposal is unsatisfactory and needs adjustments to the product categories.”
The trade agreement is important because it creates one of the largest free trade zones in the world, linking the EU with a South American block of countries representing more than 700 million people.
The original provisional agreement -still subject to legal review by the European Court of Justice- was designed to reduce or eliminates tariffs on 90 percent of bilateral trade in goods, strengthen EU access to critical minerals such as lithium, and included a safeguard mechanism for sensitive agricultural sectors as well as providing a safety net for European farmers.
