On December 6, 2024, during the 65th summit of the Southern Common Market (Mercosur) held in Montevideo, Uruguay, the Presidents of the four founding member countries of Mercosur—Argentina, Brazil, Paraguay, and Uruguay—together with European Commission President Ursula von der Leyen, announced the conclusion of the Mercosur-European Union (EU) Free Trade Agreement (FTA).
On December 6, 2024, during the 65th summit of the Southern Common Market (Mercosur) held in Montevideo, Uruguay, the Presidents of the four founding member countries of Mercosur—Argentina, Brazil, Paraguay, and Uruguay—together with European Commission President Ursula von der Leyen, announced the conclusion of the Mercosur-European Union (EU) Free Trade Agreement (FTA).
Negotiations for this agreement began in 1999 and were marked by multiple restarts and significant breakthroughs. A preliminary agreement was reached in 2019 but was delayed due to concerns from the EU regarding Brazil’s climate change policies. The finalization of this deal marks the conclusion of over 20 years of negotiations.
The agreement will create a free trade area covering more than 700 million people, with the majority of goods trade between the EU and Mercosur countries seeing tariff reductions. Mercosur will lower tariffs on imports from the EU, including automobiles, machinery, and pharmaceuticals. The EU will reduce trade barriers on products such as meat and grains from Mercosur nations. According to an analysis by Argentina's Financial Journal, the agreement is expected to save the EU approximately 4 billion euros in tariff costs in its first year of implementation.European media have hailed the agreement as a "historic trade deal," with significant geopolitical and economic implications. Wendy Cutler, Vice President of the Asia Society Policy Institute, noted that the Mercosur-EU free trade agreement was designed "not only to diversify trade partners but also to reduce dependence on the U.S. market."
Following the conclusion of the negotiations, the text of the agreement will enter the translation and legal review phase before being submitted for approval by the respective governments, legislative bodies, and the European Parliament.
This agreement presents both important opportunities and challenges for Chinese companies seeking to expand overseas. In the short term, Chinese exports to the Mercosur region will face increased competition from the EU. Products from the EU, such as automobiles, machinery, and pharmaceuticals, will have easier access to the Mercosur market, which could potentially impact Chinese exports in these sectors. On the other hand, the Mercosur-EU FTA may encourage China to strengthen its collaboration with Latin American countries within global industrial chains. By leveraging the resource advantages and market potential of Latin American nations, China could work with these countries to develop cross-border industrial chains.